Mechanism Design with Non-Contractible Information
A principal faces an agent with non-contractible information. The principal considers mechanisms with an informed manager. The main results show that a direct mechanism, by characterizing incentives of the manager, weakly dominates the optimal "selling the project" contract. The nature of incompleteness suggests a foundation of incomplete contract, the agent's information structure, and thus demands a different solution, an informational hierarchical structure with the manager. This result has new implications for the theory of the firm, as opposed to what the standard mechanism theory offers.
|Date of creation:||2016|
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