Working Paper: CEPR ID: DP13868
Authors: Eduardo Perez-Richet; Adrien Vigier; Jacopo Bizzotto
Abstract: We consider a general information design problem in which the task of producing information is delegated to an agent who can privately choose between the procedure designed by the principal and a default procedure. Procedures are constrained as to which messages they use, and possibly how they may be used. The principal can incentivize the agent via transfers conditioned on messages. This gives rise to a moral hazard problem in which the principal faces a trade-off between generating information that is persuasive in the continuation game, or generating information about the choice of the agent so as to lower the cost of agency. We provide a general methodology to solve such problems, and characterize an optimal procedure. We apply our results to information acquisition and persuasion examples.
Keywords: information design; moral hazard; agency cost; information acquisition
JEL Codes: C72; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Principal's design choices (C90) | Agent's procedure selection (L85) |
| Agent's procedure selection (L85) | Information generated about the state of the world (D89) |
| Switching costs (D23) | Informativeness of the procedure (D83) |
| Agency costs (G39) | Information design (Y10) |
| Agent's switching costs (L85) | Principal's decisions (M51) |