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Strategic Information Gathering Before a Contract is Offered

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Author Info
Cremer, J.
Khalil, F.
Rochet, J-C.

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Abstract

In a Baron-Myerson setup, we study a situation where an agent is initially uninformed, but can, at a cost, acquire information about the state of nature before the principal offers him a contract. For intermediate values of the cost of acquiring information, the agent's equilibrium strategy will be a mixed strategy: he will acquire information with a probability strictly between 0 and 2. we identify the contract that the principal will offer to such a "maybe informed" agent.

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Publisher Info
Paper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 9708.

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Date of creation: 01 Jan 1997
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Handle: RePEc:stn:sotoec:9708

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