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Krishna Morgan (2008) - Contracting For Information Under Imperfect Commitment (view source)
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|Has page=Krishna Morgan (2008) - Contracting For Information Under Imperfect Commitment
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|Has article title=Contracting For Information Under Imperfect Commitment
|Has author=Krishna Morgan
|Has year=2008
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==Reference(s)==
Krishna, Vijay and John Morgan (2008), "Contracting for information under imperfect commitment", RAND Journal of Economics, Winter, Vol. 39, No. 4, pp. 905-925. [http://faculty.haas.berkeley.edu/rjmorgan/Contracts.pdf link] [http://www.edegan.com/pdfs/Krishna%20Morgan%20(2008)%20-%20Contracting%20for%20information%20under%20imperfect%20commitment.pdf pdf]
== Results ==
Contracts with perfect commitment always achieve highest payoffs to principle. They show that under imperfect commitment, where the principle can not commit to a project, but can commit to a transfer rule, the optimal partial commitment contract has perfect separation in <math>\theta=[0,a_{0}]</math> and pooling for projects greater than that. We also show that an indirect mechanism::<math>t(y)={\frac{t_{0}-2by if y<=a_{0}}{0 if y>=a_{0}}</math>
However, if we consider like Williamson (1976) that costs of contracting can be substantial, there may be a range of biases by the agent where either imperfect commitment or delegation or even no contract what so ever which puts us completely in a Crawford and Sobel cheap talk model. We also explore an optimal delegation scheme where agent chooses any project from [0, 1-b] which leads to expected payoffs greater than imperfect commitment up to bias of amount b=.5
