Should principals explain and justify their evaluations? Suppose the principal's evaluation is private information, but she can provide justification by sending a costly cheap-talk message. If she does not provide justification, her message space is restricted, but the message is costless. I...

This paper analyzes optimal contracts in a linear hidden-action model with normally distributed returns possessing two moments that are governed jointly by two agents who have negative exponential utilities. They can observe and verify each others’ effort levels and draft enforceable...

The dissertation consists of three chapters. The fist two chapters use principal-agent models to analyze optimal contract design under the assumption that the contract can induce the agent to acquire relevant private information. Specifically, Chapter 1 demonstrates the use of stochastic...