Informed principal with correlation

• 成果类型: Article
• 署名作者: Cella, Michela
• 署名单位: University of Milano-Bicocca
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2008.01.007
• 发表日期: 2008
• 页码: 433-456
• 关键词: Informed principal; private values; correlation

摘要

In this paper we analyze an adverse selection model with one principal and one agent, who are both risk neutral and have private information. We assume that the private information of the principal is correlated with that of the agent. The main result of the paper is that the principal can extract a larger share of the surplus from the agent than in the case where her information is public. The principal can design Such a contract because she exploits the fact that her type is an informative signal on the agent's one. We fully characterize the equilibrium of the game in which different types of principal offer the same menu of contracts that leaves the agent uninformed about the principal's type. This gives more freedom to the principal when setting the transfers because the agent's constraints need to hold only at in interim stage. (C) 2008 Elsevier Inc. All rights reserved.