CONTRACTING OVER PERSISTENT INFORMATION
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Publisher
Journal
Theoretical Economics
ISSN
1933-6837
Metadata
Show full item recordAbstract
We consider a dynamic principal-agent problem, where the sole instrument the
principal has to incentivize the agent is the disclosure of information. The principal aims at maximizing the (discounted) number of times the agent chooses the
principal’s preferred action. We show that there exists an optimal policy, where
the principal recommends its most preferred action and discloses information as
a reward in the next period, until either this action becomes statically optimal for
the agent or the agent perfectly learns the state.
Authors
Renou, L; Zhao, W; Mezzetti, C; Tomala, TCollections
- Economics and Finance [371]