Limit of the Principal’s Information ()
ABSTRACT
This note characterizes the optimal contract when a
principal has unverifiable subjective information that is correlated with an
agent’s private information. We find that the principal’s subjective
information cannot alleviate the information asymmetry and, moreover, the
second best contract is independent from it if the correlation is low.
Share and Cite:
Hori, K. (2017) Limit of the Principal’s Information.
Theoretical Economics Letters,
7, 210-217. doi:
10.4236/tel.2017.72018.
Cited by
No relevant information.