Who benefits from covert evidence acquisition in principal–agent interactions?

Kym Pram

Economics Letters, 2024, vol. 237, issue C

Abstract: In a principal–agent interaction, I characterize when the agent can benefit from the ability to covertly acquire hard evidence. The same condition determines whether the principal’s payoff is monotone or U-shaped in the cost of evidence acquisition. I derive implications for aggregate welfare.

Keywords: Mechanism design; Contract theory; Information acquisition; Hard evidence (search for similar items in EconPapers)
JEL-codes: D82 D83 D86 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:237:y:2024:i:c:s0165176524001587

DOI: 10.1016/j.econlet.2024.111675

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