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Optimal contract for outsourcing information acquisition

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  • Choi, Jin Hyuk
  • Han, Kookyoung

Abstract

We consider how a principal can optimally outsource information acquisition to an agent in a dynamic environment when the principal can observe neither the agent’s effort of collecting information nor signal realizations. Neither initial transaction nor interim payments are allowed to prevent the principal from effectively delegating her decision to the agent. Focusing on scoring rules, we find a contract that allows the principal to achieve the first best: the principal can induce the agent not only to exert effort but also to report a right belief at the right time.

Suggested Citation

  • Choi, Jin Hyuk & Han, Kookyoung, 2020. "Optimal contract for outsourcing information acquisition," Economics Letters, Elsevier, vol. 195(C).
    • Handle: RePEc:eee:ecolet:v:195:y:2020:i:c:s0165176520302755
    DOI: 10.1016/j.econlet.2020.109443
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    References listed on IDEAS

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    6. Gneiting, Tilmann & Raftery, Adrian E., 2007. "Strictly Proper Scoring Rules, Prediction, and Estimation," Journal of the American Statistical Association, American Statistical Association, vol. 102, pages 359-378, March.
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    Cited by:

    1. Jin Hyuk Choi & Kookyoung Han, 2023. "Delegation of information acquisition, information asymmetry, and outside option," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(3), pages 833-860, September.

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    More about this item

    Keywords

    Information acquisition; Optimal contract; Optimal stopping; Private observation;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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