The strategically ignorant principal

Nicholas C. Bedard

Games and Economic Behavior, 2017, vol. 102, issue C, 548-561

Abstract: The value of the principal's information is studied in a common value principal–agent model. We prove in a general environment that there is a nontrivial set of parameters for which the principal strictly prefers not to be fully informed, regardless of the equilibrium played. Importantly, we do not restrict the principal's offer-space, thereby allowing her to make full strategic use of any information she has. We also show that, among partitional information structures and given certain priors, the principal's optimal information structure groups together states in which her marginal payoffs are similar and separates states in which they diverge.

Keywords: Value of information; Informed principal problem; Mechanism design (search for similar items in EconPapers)
JEL-codes: C72 C78 D82 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899825617300362
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:102:y:2017:i:c:p:548-561

DOI: 10.1016/j.geb.2017.02.010

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().