Delegation of information acquisition, information asymmetry, and outside option

Jin Hyuk Choi () and Kookyoung Han ()
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Jin Hyuk Choi: Ulsan National Institute of Science and Technology
Kookyoung Han: Pusan National University

International Journal of Game Theory, 2023, vol. 52, issue 3, No 9, 833-860

Abstract: 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.

Keywords: Information acquisition; Moral hazard; Optimal contract; Private information; C73; D82; D83 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s00182-023-00842-7

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