The Role of Private Benefits in Information Acquisition
Journal of Economic Behavior & Organization, Vol. 68, No. 3-4, December 2008
Posted: 17 May 2010
Date Written: December 2008
In many cases, the cost of an agent acquiring information is lower than that for the principal. However, because of a private benefit difference between the principal's and agent's preferences, the principal often cannot fully utilize the agent's advantage. This paper considers the cost of motivating the agent to acquire information and inducing him/her to report it truthfully. As usual, the larger the private benefit, the larger the cost of eliciting true information. At the same time, the private benefit may reduce the cost of motivating information acquisition. Thus, there are cases in which an agent with a different preference is desirable.
JEL Classification: C72, D23, D82, D86
Suggested Citation: Suggested Citation