Should contract design induce an agent to conduct a precontractual investigation even though, in any case, the agent … will become fully informed after the signing of the contract? This paper shows that imperfect investigations might be …

be implemented even if the supervisor's preferences are unknown. The corresponding optimal contract is similar to what we …

with moral hazard. The optimal contract displays systematic distortions in information acquisition. Due to a rent effect …

contract that specifies only a fixed quantity and a fixed per-unit price can induce efficient investment if marginal cost is … renegotiation and relationship-specific investment by the buyer and the seller. As demonstrated by Edlin and Reichelstein (1996), no … risk of breaching, the first best becomes attainable with a simple price-quantity contract. …

A setting of reliance investments is explored where one of the parties to a contract obtains private information … difficult task to award expectation damages corrrectly to a party with private information who sufffers from breach of contract …

limited liability, the optimal contract distinguishes only signals of good news and bad news of the agent's action. …

We consider a two-stage principal-agent model with limited liability in which a CEO is employed as agent to gather …