Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92704
Authors: 
Aoyagi, Masaki
Year of Publication: 
2012
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 832
Abstract: 
A principal acquires information about a shock and then discloses it to an agent. After the disclosure, the principal and agent each decide whether to take costly preparatory actions that yield benefits only when the shock strikes. The principal maximizes his expected payoff by controlling the quality of his information, and the disclosure rule. We show that even when the acquisition of perfect information is costless, the principal may optimally acquire imperfect information when his own action eliminates the agent's incentive to take action against the risk.
Subjects: 
endogenous information
disclosure
signal quality
transparency
specific investment
strategic ignorance
JEL: 
C72
D82
Document Type: 
Working Paper

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