Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/123750 
Authors: 
Year of Publication: 
2015
Series/Report no.: 
Bank of Canada Working Paper No. 2015-7
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper studies the use of information for incentives and risk sharing in agency problems. When the principal is risk neutral or the outcome is contractible, risk sharing is unnecessary or completely taken care of by a contract on the outcome. In this case, information systems are ranked according to their informativeness of the agent's action. When the outcome is noncontractible, however, the principal has to rely on imperfect information for both incentives and risk sharing. Under the first-order approach, we characterize a problem-independent ranking of information systems, which is relaxed from Gjesdal's (1982) criterion. We also find sufficient conditions justifying the first-order approach.
Subjects: 
Economic models
JEL: 
D8
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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