Observability of information acquisition in agency models

Eva Hoppe

Economics Letters, 2013, vol. 119, issue 1, 104-107

Abstract: We consider an adverse selection model in which the agent can gather private information before the principal offers the contract. In scenario I, information gathering is a hidden action, while in scenario II, it is observable. We study how the two scenarios differ. Specifically, the principal may be better off when information gathering is a hidden action.

Keywords: Adverse selection; Information gathering; Hidden information (search for similar items in EconPapers)
JEL-codes: C72 D82 D86 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:119:y:2013:i:1:p:104-107

DOI: 10.1016/j.econlet.2013.01.015

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