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- W3152441330 abstract "We study the costs and bene ts of additional information in agency contracts, when there is the possibility of renegotiation. The literature to date assumes that contractual simplicity, i.e. the omission of informative contractual contingencies, can only arise in multi-period environments, and only in a speci c manner in which it is interim information that is excluded. In contrast, we show that in certain circumstances, it is also e¢ cient to restrict the set of contingencies in a standard one period contract, where all information arrives at once. Although increasing the number of contingencies will always decrease the agency cost, it can have the adverse e¤ect of weakening the principals commitment not to renegotiate, thus undermining ex ante incentives to exert e¤ort. Applications to several real world phenomena are briey explored. Keywords: Moral Hazard, Renegotiation, Commitment, Multiple Signals, Contractual Simplicity. JEL Classi cation: D86" @default.
- W3152441330 created "2021-04-13" @default.
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- W3152441330 date "2014-01-01" @default.
- W3152441330 modified "2023-10-12" @default.
- W3152441330 title "Moral Hazard and Renegotiation of Multi-Signal Contracts" @default.
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