Mechanism sufficient statistic in the risk-neutral agency problem

Demougin, D and Fluet, C (1998) Mechanism sufficient statistic in the risk-neutral agency problem JOURNAL OF INSTITUTIONAL AND THEORETICAL ECONOMICS-ZEITSCHRIFT FUR DIE GESAMTE STAATSWISSENSCHAFT, 154 (4). pp. 622-639. ISSN 0932-4569

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Abstract

This paper analyzes the efficient use of information in an agency relationship with moral hazard, when parties are risk-neutral. We show that, given an arbitrary information system, all relevant information from a mechanism-design point of view can be summarized by a binary statistic. We then show that this allows a complete ordering of information systems for the risk-neutral agency problem. These results are obtained under a weak convexity condition which does not rely on an exogenous ordering on signal sets. The condition is shown to be more general than existing requirements for justifying the first-order approach.

Item Type:	Article
Uncontrolled Keywords:	D2, D8
Depositing User:	Symplectic Admin
Date Deposited:	15 Aug 2016 09:59
Last Modified:	16 Jun 2026 06:09
Related Websites:	Author
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3002939
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