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Who benefits from covert evidence acquisition in principal–agent interactions?

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  • Pram, Kym

Abstract

In a principal–agent interaction, I characterize when the agent can benefit from the ability to covertly acquire hard evidence. The same condition determines whether the principal’s payoff is monotone or U-shaped in the cost of evidence acquisition. I derive implications for aggregate welfare.

Suggested Citation

  • Pram, Kym, 2024. "Who benefits from covert evidence acquisition in principal–agent interactions?," Economics Letters, Elsevier, vol. 237(C).
    • Handle: RePEc:eee:ecolet:v:237:y:2024:i:c:s0165176524001587
    DOI: 10.1016/j.econlet.2024.111675
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    References listed on IDEAS

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    1. Cremer, Jacques & Khalil, Fahad & Rochet, Jean-Charles, 1998. "Contracts and Productive Information Gathering," Games and Economic Behavior, Elsevier, vol. 25(2), pages 174-193, November.
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    More about this item

    Keywords

    Mechanism design; Contract theory; Information acquisition; Hard evidence;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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