Abstract
We analyze a principal-agent model with moral hazard in which the principal has private information about the technology. We characterize Perfect Bayesian Equilibria of the contracting game that possess the following properties: (i) a principal with a more informative technology ends up earning less profits than a principal with a less informative one does; (ii) compared to the complete information case, the actions implemented by the privately informed principal can be distorted; (iii) the agent can end up being better off when the principal has private information.
Original language | English (US) |
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Pages (from-to) | 291-300 |
Number of pages | 10 |
Journal | Economics Letters |
Volume | 74 |
Issue number | 3 |
DOIs | |
State | Published - Feb 2002 |
Keywords
- Informed principal
- Moral hazard
- Principal-agent
ASJC Scopus subject areas
- Finance
- Economics and Econometrics