Burguet, Roberto; Ganuza, Juan-José; Hauk, Esther - In: Games and Economic Behavior 76 (2012) 1, pp. 15-25
In the presence of cost uncertainty, limited liability introduces the possibility of default in procurement. If financial soundness is not perfectly observable, then financially weaker contractors are selected with higher probability in any incentive compatible mechanism. Informational rents are...
