Incentive compatible contractible information

The paper seeks to characterize what information is always available for contracting, independent of the form of the contract and the probabilities of different states of nature. The paper denotes such information as contractible. It is established that it is possible to speak uniquely of maximal contractible information. Several characterizations are exhibited. In particular, it is shown that if either (a) punishments are bounded everywhere, or (b) deviations from truth-telling are either always or never detected, then maximum contractible information coincides with <InlineEquation ID="Equ1"> <EquationSource Format="TEX"><![CDATA[$\bigwedge_{i}\bigvee_{j\neq i}\mathcal{E}_{j}$]]></EquationSource> </InlineEquation> where <InlineEquation ID="Equ2"> <EquationSource Format="TEX"><![CDATA[$\mathcal{E}_{j}$]]></EquationSource> </InlineEquation> is the information partition of agent j. An argument is given for why (b) may be expected to hold. Copyright Springer-Verlag Berlin Heidelberg 2003