Yale University - Cowles Foundation
Stanford Graduate School of Business
May 26, 2011
Cowles Foundation Discussion Paper No. 1743R
We characterize optimal selling protocols/equilibria of a game in which an Agent first puts hidden effort to acquire information and then transacts with a Firm that uses this information to take a decision. We determine the equilibrium payoffs that maximize incentives to acquire information. Our analysis is similar to finding ex ante optimal self-enforcing contracts since information sharing, outcomes and transfers cannot be contracted upon. We show when and how selling and transmitting information gradually helps. We also show how mixing/side bets increases the Agent's incentives.
Number of Pages in PDF File: 59
Keywords: Value of information, Dynamic game
JEL Classification: C72, D82, D83working papers series
Date posted: June 1, 2011 ; Last revised: August 20, 2011
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