Precontractual Investigation and Sequential Screening

Should contract design induce an agent to conduct a precontractual investigation even though, in any case, the agent will become fully informed after the signing of the contract? This paper shows that imperfect investigations might be encouraged. The result stands in contrast to previous studies, which focus on perfect investigations. The contrast exists because if precontractual investigation is perfect, the benefits of sequential screening vanish.

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Year of publication:	2013
Authors:	Terstiege, Stefan
Publisher:	München : Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
Subject:	Principal agent \| information acquisition \| sequential screening

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Series:	SFB/TR 15 Discussion Paper ; 429
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	10.5282/ubm/epub.17334 [DOI] 771019475 [GVK] hdl:10419/93881 [Handle] RePEc:trf:wpaper:429 [RePEc]
Classification:	D82 - Asymmetric and Private Information ; D83 - Search, Learning, Information and Knowledge ; D86 - Economics of Contract: Theory
Source:	EconStor

Persistent link: https://www.econbiz.de/10010333858