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https://doi.org/10.1093/restud/rdu019

has been cited by the following article:

• TITLE: Limit of the Principal’s Information

  AUTHORS: Kazumi Hori

  KEYWORDS: Adverse Selection, Subjective Information, Correlation

  JOURNAL NAME: Theoretical Economics Letters, Vol.7 No.2, February 28, 2017

  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.