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-relevant private information, we show the VA decision also provides contract-relevant private information. We develop an approach to … signal when the VA decision suggests the firm expects the loss to be transitory (persistent). We show that variation in … performance signal. Overall, our results suggest that extracting private information from the VA decision provides an innovative …
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The paper studies procurement contracts with pre-project investigations in the presence of adverse selection and moral hazard. To model the procurer's roblem, we extend a standard sequential screening model to endogenous information acquisition with moral hazard. The optimal contract displays...
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