The informativeness principle without the first-order approach

Pierre Chaigneau, Alex Edmans and Daniel Gottlieb ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Holmström (1979) provides a condition for a signal to have positive value assuming the validity of the first-order approach. This paper extends Holmström's analysis to settings where the first-order approach may not hold. We provide a new condition for a signal to have positive value that takes non-local incentive constraints into account and holds generically. Our condition is the weakest condition possible in the absence of restrictions on the utility function.

Keywords: Contract theory; principal-agent model; informativeness principle (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2019-01-01
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in Games and Economic Behavior, 1, January, 2019, 113, pp. 743 - 755. ISSN: 0899-8256

Downloads: (external link)
http://eprints.lse.ac.uk/102226/ Open access version. (application/pdf)

Related works:
Journal Article: The informativeness principle without the first-order approach (2019)
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:ehl:lserod:102226

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().