The Generalized Informativeness Principle

This paper shows that the informativeness principle, as originally formulated by Holmstrom (1979), does not hold if the first-order approach is invalid. We introduce a "generalized informativeness principle" that takes into account non-local incentive constraints and holds generically, even without the first-order approach. Our result holds for both separable and non-separable utility functions.

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Year of publication:	2014-12
Authors:	Chaigneau, Pierre ; Edmans, Alex ; Gottlieb, Daniel
Institutions:	C.E.P.R. Discussion Papers
Subject:	Contract theory \| informativeness principle. \| principal-agent model

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Extent:	application/pdf
Series:	CEPR Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 10279
Classification:	D86 - Economics of Contract: Theory ; J33 - Compensation Packages; Payment Methods
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011096100