Template-Type: ReDIF-Paper 1.0
Title: Randomization in contracts with endogenous information
Author-Name: Stefan Terstiege
Author-Email: sterstiege@uni-bonn.de
Classification-JEL: D82, D83
Keywords: Information acquisition, Principal-agent, Mechanism design, Randomization
Abstract: 	I consider a situation, where the agent can acquire payoff-relevant 
	information either before or after the contract is signed. To raise efficiency,
	the principal might  solicit information; to retain all surplus, however, she must
	prevent precontractual information gathering. The following class of stochastic
	contracts may solve this trade-off optimally: before  signing, information acquisition
	is not solicited, and afterwards randomly. The key insight is that randomization makes
	precontractual information  costlier for the agent.

Note: 
Length: 25
Creation-Date: 2011-06
Revision-Date: 
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse07_2011.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse07_2011