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Leavey School of Business Santa Clara University
Department ofEconomics

Selected Publications

Information Acquisition and Countervailing Incentives

Dongsoo Shin and Sungho Yun

Journal of Mathematical Economics 107, 102848, August 2023

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Abstract

In an agency model, we study how countervailing incentives, which lead to a “bunching” region of the optimal output schedule, are affected by costly information acquisition. We show that, when inducing the agent’s information acquisition, the principal increases the value of information to the agent by squeezing and moving the bunching region toward the expected state, and completely removes the region for sufficiently large information acquisition costs. When deterring information acquisition, the principal reduces the value of information to the agent by distorting the optimal output upward or downward. We also analyze the optimality of inducing or deterring information acquisition in the presence of countervailing incentives.

LSB Research, ECON, 2023, Dongsoo Shin