The Allocation of Authority and Information Revelation

Dongryul Lee
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Dongryul Lee: Sungshin University

Korean Economic Review, 2014, vol. 30, 5-23

Abstract: We study the allocation of authority and the possibility of information revelation in a principal-agent model where the principal faces both problems of adverse selection and moral hazard. We find that the consideration for information asymmetry and effort incentive for the agent makes the principal more likely delegate. Interestingly, we find that the informed agent has an ex-ante incentive to commit to reveal his information to the principal voluntarily if the information is hard.

Keywords: Delegation; Information Revelation; Incentives; Contract (search for similar items in EconPapers)
JEL-codes: D20 D81 D82 D86 (search for similar items in EconPapers)
Date: 2014
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