Pessimistic information gathering

Elisabetta Iossa and David Martimort

PSE-Ecole d'économie de Paris (Postprint) from HAL

Abstract: An agent gathers information on productivity shocks and accordingly produces on behalf of a principal. Information gathering is imperfect and whether it succeeds or not depends on the agent's effort. Contracting frictions come from the fact that the agent is pessimistic on the issue of information gathering, and there are both moral hazard in information gathering, private information on productivity shocks and moral hazard on operating effort. An optimal menu of linear contracts mixes high-powered, productivity-dependent screening options following "good news" with a fixed low-powered option otherwise.

Keywords: Information gathering; Moral hazard; Asymmetric information; Pessimism (search for similar items in EconPapers)
Date: 2015-05
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Citations: View citations in EconPapers (21)

Published in Games and Economic Behavior, 2015, 91, pp.75-96. ⟨10.1016/j.geb.2015.03.014⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-01156552

DOI: 10.1016/j.geb.2015.03.014

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