The informativeness principle without the first-order approach

Chaigneau, P, Edmans, A and Gottlieb, D (2019) The informativeness principle without the first-order approach. Games and Economic Behavior, 113. pp. 743-755. ISSN 0899-8256

Abstract

Holmström (1979) provides a condition for a signal to have positive value assuming the validity of the first-order approach. This paper extends Holmström’s analysis to settings where the first-order approach may not hold. We provide a new condition for a signal to have positive value that takes non-local incentive constraints into account and holds generically. Our condition is the weakest condition possible in the absence of restrictions on the utility function.

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Item Type: Article
Subject Areas: Finance
Additional Information: © Elsevier 2018. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0
Subjects: C > Contracts and agency
Date Deposited: 11 Sep 2018 09:12
Last Modified: 23 Oct 2019 00:33
URI: http://lbsresearch.london.edu/id/eprint/1002
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