Szalay, Dezsö (2007) Contracts with endogenous information. Working Paper. : Unpublished..

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Abstract

I study covert information acquisition and reporting in a principal agent problem allowing for general technologies of information acquisition. When posteriors satisfy two dimensional versions of the standard First Order Stochastic Dominance and Concavity/Convexity of the Distribution Function conditions, a first-order approach is justfied. Under the same conditions, informativeness and riskiness of reports are equivalent. High powered contracts, that make the agent's informational rents more risky, are used to increase incentives for information acquisition, insensitive contracts are used to reduce incentives for information gathering. The value of information to the agent is always positive. The value of information to the principal is ambiguous.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics Other > Learning and Development Centre
Library of Congress Subject Headings (LCSH):	Information, Stochastic orders
Publisher:	Unpublished
Place of Publication:
Date:	11 December 2007
Number of Pages:	49
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	Working paper
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URI:	http://wrap.warwick.ac.uk/id/eprint/77

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