When does it pay to get informed?

Research output: Contribution to journalArticle

10 Scopus citations

Abstract

A repeated principal-agent problem where both sides start out symmetrically uninformed about a productivity-related parameter and where the principal has the option to costlessly learn this parameter is analyzed. Typically, the principal delays the acquisition of information to avoid costly signaling. If the learning decision of the principal is observable by the agent, the expected delay is longer than if it is unobservable. The discrepancy is due to the ability of the principal to avoid costly signaling when he is known to be uninformed.

Original languageEnglish (US)
Pages (from-to)533-551
Number of pages19
JournalInternational Economic Review
Volume51
Issue number2
DOIs
StatePublished - May 1 2010
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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