Working Paper: CEPR ID: DP9065
Authors: Patrick W. Schmitz
Abstract: An agent can make an observable but non-contractible investment. A principal then offers to collaborate with the agent to provide a public good. Private information of the agent about his valuation may either decrease or increase his investment incentives, depending on whether he learns his type before or after the investment stage.
Keywords: asymmetric information; incomplete contracts; investment incentives; public goods
JEL Codes: D82; D86; H41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| asymmetric information (D82) | increased investment incentives (E22) |
| timing of information revelation (G14) | increased investment incentives (E22) |
| asymmetric information (D82) | decreased investment incentives (G31) |
| timing of information revelation (G14) | decreased investment incentives (G31) |