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Informed Principal and Countervailing Incentives

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  • Pierre Fleckinger

    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, Paris School of Economics - Université Paris I - Panthéon-Sorbonne)

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    Abstract

    It has been shown by Maskin and Tirole (1990, proposition 11) that with quasi-linear preferences and private values, an informed principal neither gains nor loses if her private information is revealed before contracting takes place. The note shows that this result may not hold when the agent faces countervailing incentives.

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    Bibliographic Info

    Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00607075.

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    Date of creation: Feb 2007
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    Publication status: Published, Economics Letters, 2007, 94, 2, 240-244
    Handle: RePEc:hal:cesptp:hal-00607075

    Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00607075
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    Related research

    Keywords: Informed Principal; Countervailing Incentives; Risk Neutrality;

    References

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    1. Jullien, Bruno, 2000. "Participation Constraints in Adverse Selection Models," Journal of Economic Theory, Elsevier, Elsevier, vol. 93(1), pages 1-47, July.
    2. Michela Cella, 2006. "Informed Principal with Correlation," Economics Series Working Papers, University of Oxford, Department of Economics 261, University of Oxford, Department of Economics.
    3. Roger B. Myerson, 1981. "Mechanism Design by an Informed Principal," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 481, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    4. Maggi G. & Rodriguez-Clare A., 1995. "On Countervailing Incentives," Journal of Economic Theory, Elsevier, Elsevier, vol. 66(1), pages 238-263, June.
    5. Maskin, Eric & Tirole, Jean, 1990. "The Principal-Agent Relationship with an Informed Principal: The Case of Private Values," Econometrica, Econometric Society, Econometric Society, vol. 58(2), pages 379-409, March.
    6. Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, Elsevier, vol. 49(2), pages 294-313, December.
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    Cited by:
    1. Thomas Troeger & Tymofiy Mylovanov, 2010. "Optimal Auction Design and Irrelevance of Privacy of Information," 2010 Meeting Papers, Society for Economic Dynamics 1039, Society for Economic Dynamics.

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