The Value of Symmetric Information in an Agency Model with Moral Hazard: The Ex Post Contracting Case

In a principal-agent environment with moral hazard, when contracting occurs after the principal receives information about her technology, the principal cannot insure against the possibility that the technology is less informative. From an ex ante perspective, we show that: (i) the principal is worse off by acquiring private information if the agent will know that she is informed; (ii) the value of public information is negative if the principal implements the same action profile; and (iii) although the agent prefers that the principal has private information, there exists a transfer and a contract that make both players better off with complete information.