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Contracts and Productive Information Gathering

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  • Cremer, Jacques
  • Khalil, Fahad
  • Rochet, Jean-Charles

Abstract

We modify a standard Baron-Myerson model by assuming that, instead of knowing the cost of nature, the agent has to incur a cost "c" to learn it. Under these conditions, the principal will offer contracts that, dependind on the value of "c", try to induce the agent to gather or not information. We study the tradeoffs that are involved.
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Suggested Citation

  • Cremer, Jacques & Khalil, Fahad & Rochet, Jean-Charles, 1998. "Contracts and Productive Information Gathering," Games and Economic Behavior, Elsevier, vol. 25(2), pages 174-193, November.
  • Handle: RePEc:eee:gamebe:v:25:y:1998:i:2:p:174-193
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    References listed on IDEAS

    as
    1. Cremer, Jacques & Khalil, Fahad & Rochet, Jean-Charles, 1998. "Strategic Information Gathering before a Contract Is Offered," Journal of Economic Theory, Elsevier, pages 163-200.
    2. repec:fth:jonhop:390 is not listed on IDEAS
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    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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