We consider the role of credit ratings when contracts between investors and portfolio managers are incomplete. In our model, a credit rating and a price on a risky bond both provide verifiable signals about a non-contractible state. We allow the investor to both impose ex ante restrictions on...

We provide two examples in a pure moral hazard setting with two principals and two agents. Example 1 shows that a strongly robust equilibrium in simple (direct) mechanisms can no longer be sustained as an equilibrium when a principal can deviate to an indirect communication scheme. Conversely,...