We solve the principal-agent problem of a monopolist insurer selling to an agent whose riskiness (loss chance) is private information, a problem introduced in Stiglitz's (1977) seminal paper. For an \emph{arbitrary} type distribution, we prove several properties of optimal menus, such as...

The main results are the following ones. First, the only consumption that can be part of an equilibrium is the one that optimizes the inter-temporal utility of the agent if he refuses the contract. Second, a necessary condition for an action to be implementable is that, at the optimal...

We show that when the prior that the return is high is below (above) a half, the agent is rewarded for low (high) signals. This is problematic if the agent can hide options, because then he might show only low signals. The possibility of hiding endogenously affects current and future information...

Is there an intrinsic nonconcavity to the value of information? In an influential paper, Radner and Stiglitz (1984, henceforth RS) suggests that there is. They demonstrated, in a seemingly general model, that the marginal value of a small amount of information is zero. Since costless information...