The informativeness principle without the first-order approach
Chaigneau, P., Edmans, A. & Gottlieb, D.
(2019).
The informativeness principle without the first-order approach.
Games and Economic Behavior,
113, 743 - 755.
https://doi.org/10.1016/j.geb.2018.08.006
(2019).
The informativeness principle without the first-order approach.
Games and Economic Behavior,
113, 743 - 755.
https://doi.org/10.1016/j.geb.2018.08.006
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.