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Delegation of information acquisition, information asymmetry, and outside option

Author

Listed:
  • Jin Hyuk Choi

    (Ulsan National Institute of Science and Technology)

  • Kookyoung Han

    (Pusan National University)

Abstract

We study how a principal with an outside option optimally delegates information acquisition to an agent in a parsimonious environment in which the principal can observe neither the agent’s effort nor signal realizations. When the principal chooses an outside option, the true state is not revealed and thus not contractible. We precisely characterize an optimal contract for the principal, illustrating how to construct an optimal contract.

Suggested Citation

  • Jin Hyuk Choi & Kookyoung Han, 2023. "Delegation of information acquisition, information asymmetry, and outside option," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(3), pages 833-860, September.
    • Handle: RePEc:spr:jogath:v:52:y:2023:i:3:d:10.1007_s00182-023-00842-7
    DOI: 10.1007/s00182-023-00842-7
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    References listed on IDEAS

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