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Pessimistic information gathering

Author

Listed:
  • Elisabetta Iossa

    (University of Rome "Tor Vergeta" - Università degli Studi di Roma Tor Vergata [Roma] = University of Rome Tor Vergata, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR)

  • David Martimort

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract

An agent gathers information on productivity shocks and accordingly produces on behalf of a principal. Information gathering is imperfect and whether it succeeds or not depends on the agent's effort. Contracting frictions come from the fact that the agent is pessimistic on the issue of information gathering, and there are both moral hazard in information gathering, private information on productivity shocks and moral hazard on operating effort. An optimal menu of linear contracts mixes high-powered, productivity-dependent screening options following "good news" with a fixed low-powered option otherwise.

Suggested Citation

  • Elisabetta Iossa & David Martimort, 2015. "Pessimistic information gathering," PSE-Ecole d'économie de Paris (Postprint) halshs-01156552, HAL.
    • Handle: RePEc:hal:pseptp:halshs-01156552
    DOI: 10.1016/j.geb.2015.03.014
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    More about this item

    Keywords

    Information gathering; Moral hazard; Asymmetric information; Pessimism;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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