Information Design with Agency

Jacopo Bizzotto (1) , Eduardo Perez-Richet (2, 3) , Adrien Vigier (4)

1 OsloMet - Oslo Metropolitan University
2 ECON - Département d'économie (Sciences Po)
3 CEPR - Center for Economic Policy Research
4 BI Norwegian Business School [Oslo]

We consider a general information design problem in which the task of running a procedure generating information for a continuation game is performed by an agent. A moral hazard problem therefore emerges in which the principal faces a trade-off between generating information that is persuasive in the continuation game, and efficiently incentivizing the agent to comply with the procedure designed. Standard concavification techniques do not apply in this environment. We provide a general methodology to tackle such problems, and examine the way in which moral hazard affects the optimal procedure of the principal.

Keywords: Information Design; Moral Hazard; Agency Cost; Information Acquisition

Domains: Humanities and Social Sciences; Economics and Finance

Jacopo Bizzotto, Eduardo Perez-Richet, Adrien Vigier. Information Design with Agency. 2020. ⟨hal-03874017⟩