Article ID Journal Published Year Pages File Type
5071612 Games and Economic Behavior 2016 18 Pages PDF
Abstract
I study information gathering for rent-seeking purposes in contracting. In my model, an agent learns his payoff type only after accepting a contract, but can at costs acquire imperfect information while deliberating whether to accept. I show that the principal deters the acquisition if and only if the costs are high. The result stands in contrast to a finding by Crémer and Khalil (1992), who demonstrate that the acquisition of perfect information will always be deterred. A key insight is that the case of imperfect information is an instance of a sequential-screening problem.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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