poor economies, thus insufficient information to set the appropriate standards for firm performance. The model predicts a … differ as these societies have access to different amounts of information. This lack of information makes it hard to give the … right incentives to managers and entrepreneurs. We argue that differences in the amount of information arise because of the …

introduced by the presence of moral hazard naturally depends on the information structure in the economy; it is cheaper to induce … correct incentives in a society which possesses better ex-post information. The degree of ex-post information depends on the … number of projects and entrepreneurs in the economy; the more projects, the better the information. This implies that in the …