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Informed principal, moral hazard, and the value of a more informative technology

Chade, Hector and Silvers, Randolph 2002, Informed principal, moral hazard, and the value of a more informative technology, Economic letters, vol. 74, no. 3, pp. 291-300.

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Title Informed principal, moral hazard, and the value of a more informative technology
Author(s) Chade, Hector
Silvers, Randolph
Journal name Economic letters
Volume number 74
Issue number 3
Start page 291
End page 300
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2002-02
ISSN 0165-1765
Keyword(s) moral hazard
principal-agent
informed principal
Summary We analyze a principal-agent model with moral hazard in which the principal has private information about the technology. We characterize Perfect Bayesian Equilibria of the contracting game that possess the following properties: (i) a principal with a more informative technology ends up earning less profits than a principal with a less informative one does; (ii) compared to the complete information case, the actions implemented by the privately informed principal can be distorted; (iii) the agent can end up being better off when the principal has private information.
Language eng
Field of Research 140104 Microeconomic Theory
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2002, Elsevier Science B.V.
Persistent URL http://hdl.handle.net/10536/DRO/DU:30006618

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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