Contracts with Endogenous Information

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: I study covert information acquisition and reporting in a principal agent problem allowing for general technologies of information acquisition. When posteriors satisfy local versions of the standard First Order Stochastic Dominance and Concavity/Convexity of the Distribution Function conditions, a first-order approach is justified. Under the same conditions, informativeness and riskiness of reports are equivalent. High powered contracts, that make the agents informational rents more risky, are used to increase incentives for information acquisition, insensitive contracts are used to reduce incentives for information gathering. The value of information to the agent is always positive. The value of information to the principal is ambiguous.

Keywords: Asymmetric Information; Mechanism Design; Information Acquisition; Stochastic Ordering; Value of Information (search for similar items in EconPapers)
JEL-codes: D82 D83 L51 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2006
New Economics Papers: this item is included in nep-ict
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https://warwick.ac.uk/fac/soc/economics/research/w ... s/2008/twerp_780.pdf

Related works:
Journal Article: Contracts with endogenous information (2009)
Working Paper: Contracts with Endogenous Information (2006)
Working Paper: Contracts with Endogenous Information (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:780

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