Contracting for Decision-Relevant Beliefs

Bo Cowgill

Papers from arXiv.org

Abstract: Forecasts guide decisions, but an expert who privately values the decision may misreport beliefs to influence it. We study contracts that jointly screen the expert's belief about a verifiable state and her stake in a binary action. When two distinct stake types can each hold every belief, exact belief-only IC forces the action to ignore the report. Joint screening permits responsiveness but may require implementation rent. For thresholds, minimum rent equals the distribution-weighted positive curvature of the belief-dependent cutoff. Optimal threshold design is rent-adjusted concavification. We give sufficient conditions for unrestricted threshold optimality and bound possible gains when they fail.

Date: 2026-09, Revised 2026-09
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