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Pessimistic information gathering

Listed author(s):
  • Iossa, Elisabetta
  • Martimort, David

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.

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File URL: http://www.sciencedirect.com/science/article/pii/S0899825615000639
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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 91 (2015)
Issue (Month): C ()
Pages: 75-96

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Handle: RePEc:eee:gamebe:v:91:y:2015:i:c:p:75-96
DOI: 10.1016/j.geb.2015.03.014
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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