The Generalized Informativeness Principle

Pierre Chaigneau, Alex Edmans and Daniel Gottlieb ()

No 20729, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper shows that the informativeness principle, as originally formulated by Holmstrom (1979), does not hold if the first-order approach is invalid. We introduce a "generalized informativeness principle" that takes into account non-local incentive constraints and holds generically, even without the first-order approach. Our result holds for both separable and non-separable utility functions.

JEL-codes: D86 J33 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-mic and nep-upt
Note: CF LE LS
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Citations: View citations in EconPapers (1)

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Working Paper: The Generalized Informativeness Principle (2014)
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