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 : Unpublished.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Publisher:	Unpublished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:
Official Date:	11 December 2007
Dates:	Date Event 11 December 2007 ["eprint_fieldopt_dates_date_type_modified" not defined]
Number of Pages:	49
Institution:	University of Warwick
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	Working paper

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