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Pessimistic information gathering

Author

Listed:
  • Elisabetta Iossa

    (University of Rome "Tor Vergeta" - University of Rome "Tor Vergeta", 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, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - EHESS - École des hautes études en sciences sociales - INRA - Institut National de la Recherche Agronomique - ENS Paris - École normale supérieure - Paris)

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 - Labex "OSE-Ouvrir la Science Economique" halshs-01156552, HAL.
  • Handle: RePEc:hal:pseose:halshs-01156552
    DOI: 10.1016/j.geb.2015.03.014
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01156552
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Information gathering; Moral hazard; Asymmetric information; Pessimism;

    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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