Value of communication in agencies
type: Item
instance of: scholarly article
title: Value of communication in agencies
zbMATH Open document ID: 0669.90002
DOI: 10.1016/0022-0531(89)90023-9
author: Nahum D. Melumad
author: Stefan Reichelstein
published in: Journal of Economic Theory
publication date: 1989-01-01T00:00:00Z
review text: Focusing on an agency model in which the agent receives private information prior to contracting, we analyze whether the principal benefits from offering the agent a menu of contracts. We show that, under certain conditions, the constraints imposed by the self-selection requirement are so restrictive that a menu of contracts has no value, i.e., the principal might as well offer a single contract based only on some jointly observed outcome. Conversely, we identify cases where a menu of contracts is valuable because it allows the principal to implement a more efficient incentive structure.
Mathematics Subject Classification ID: 91B06
zbMATH DE Number: 4097063
zbMATH Keywords: informational economics
zbMATH Keywords: principal-agent problem
zbMATH Keywords: agency model
zbMATH Keywords: private information
zbMATH Keywords: self-selection
MaRDI profile type: Publication
full work available at URL: 0022-0531(89)90023-9
OpenAlex ID: W1989243247
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description: scientific article; zbMATH DE number 4097063