Information Revelation in Relational Contracts∗
نویسندگان
چکیده
This paper shows that the efficiency of relational contracting can be increased by reducing the public information through a novel intertemporalgarbling process of signals. A distinctive and essential feature of our intertemporalgarbling process is that past outputs have enduring effects on future signals. This process reduces the principal’s maximal reneging temptation by linking together the principal’s non-reneging constraints both across states and over time. JEL Classifications: C61, C73, D80
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