Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71894
Authors: 
Terstiege, Stefan
Year of Publication: 
2011
Series/Report no.: 
Bonn Econ Discussion Papers 07/2011
Abstract: 
I consider a situation, where the agent can acquire payoff-relevant information either before or after the contract is signed. To raise efficiency, the principal might solicit information; to retain all surplus, however, she must prevent precontractual information gathering. The following class of stochastic contracts may solve this trade-off optimally: before signing, information acquisition is not solicited, and afterwards randomly. The key insight is that randomization makes precontractual information costlier for the agent.
Subjects: 
Information acquisition
Principal-agent
Mechanism design
Randomization
JEL: 
D82
D83
Document Type: 
Working Paper

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