Krishna Morgan (2008) - Contracting For Information Under Imperfect Commitment

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Revision as of 23:11, 4 April 2010 by imported>Ed (New page: ==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://fa...)
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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. link pdf

Abstract

We study optimal contracting under imperfect commitment in a model with an uninformed principal and an informed agent. The principal can commit to pay the agent for his advice but retains decision-making authority. Under an optimal contract, the principal should (a) never induce the agent to fully reveal what he knows? even though this is feasible? and (b) never pay the agent for imprecise information. We compare optimal contracts under imperfect commitment to those under full commitment as well as to delegation schemes. We 2nd that gains from contracting are greatest when the divergence in the preferences of the principal and the agent is moderate.

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