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| Content Provider | ACM Digital Library |
|---|---|
| Author | Carroll, Gabriel |
| Abstract | A principal needs to make a decision. An expert is able to supply information that is helpful to the principal, but only by exerting effort, which is costly. The principal can incentivize the expert to put in effort by paying him a reward based on his reported information and on the true state of nature, which is revealed ex post. There is limited liability - payments can never be negative. The principal is uncertain about the expert's information acquisition technology: she knows some actions (experiments) that he can take to obtain information, but there may also be other experiments available. In the face of this uncertainty, the principal evaluates any incentive contract she may offer using a maxmin expected utility criterion. Under quite general conditions, we show that the optimal contract is a "restricted investment contract," in which the expert chooses from a subset of the decisions available to the principal, and is then rewarded proportionally to the value of his designated decision in the realized state (although the decision that the principal actually makes need not be the same as the one designated by the expert). |
| Starting Page | 161 |
| Ending Page | 162 |
| Page Count | 2 |
| File Format | |
| ISBN | 9781450319621 |
| DOI | 10.1145/2482540.2482605 |
| Language | English |
| Publisher | Association for Computing Machinery (ACM) |
| Publisher Date | 2013-06-16 |
| Publisher Place | New York |
| Access Restriction | Subscribed |
| Subject Keyword | Scoring rule Information acquisition Principal-expert problem Robustness Restricted investment contract Moral hazard |
| Content Type | Text |
| Resource Type | Article |
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