Cremer, J., Khalil, F. and Rochet, J-C.
Contracts and productive information gathering , Southampton, UK University of Southampton
(Discussion Papers in Economics and Econometrics, 9707).
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We modify a standard Baron-Myerson model by assuming that, instead of knowing the state of nature, the agent has to incur a cost, (g) , to learn it. Under these conditions, the principal will offer contracts that, depending on the value of (g), incite the agent to gather or not to gather information. We study tradeoffs that are involved
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