Moral Hazard and Observability
Bengt Holmstrom ()
Bell Journal of Economics, 1979, vol. 10, issue 1, 74-91
The role of imperfect information in a principal-agent relationship subject to moral hazard is considered. A necessary and sufficient condition for imperfect information to improve on contracts based on the payoff alone is derived, and a characterization of the optimal use of such information is given.
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Working Paper: Moral Hazard and Observability (1997)
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