This paper studies the structure of optimal finance contracts in an agency model of outside finance, when investors possess private information. We show that, depending on the intensity of the entrepreneur's moral hazard problem, optimal contracts induce full, partial, or no revelation of the...

In a class of informed principal problems with common values often used in applications we define a particular mechanism which we call the assured allocation. It is always undominated, i.e. efficient among the different types of the principal. We show it is a perfect Bayesian equilibrium...

We consider a mechanism design setting in which agents can acquire costly information on their preferences as well as others'. The choice of the mechanism generates informational incentives as it affects what information is acquired before play begins. A mechanism is informationally simple if...

This paper reconsiders the general informed principal model with unilateral private information and common values. First, it identifies some fundamental properties of the Rothschild-Stiglitz-Wilson (RSW) allocation (i.e., the undominated for the principal allocation within the set of incentive...

This paper reconsiders the general informed principal model with unilateral private information and common values. First, it identifies some fundamental properties of the Rothschild-Stiglitz-Wilson (RSW) allocation (i.e., the undominated for the principal allocation within the set of incentive...

Riordan and Sappington (JET, 1988) show that in an agency relationship in which the agent's type is correlated with a public ex post signal, the principal may attain first best (full surplus extraction and efficient output levels) if the agent is faced with a lottery such that each type is...

We consider a general information design problem in which the task of running a procedure generating information for a continuation game is performed by an agent. A moral hazard roblem therefore emerges in which the principal faces a trade-off between generating information with an eye to the...