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Terstiege, Stefan (22. October 2013): Precontractual Investigation and Sequential Screening. SFB/TR 15 Discussion Paper No. 429 [PDF, 358kB]


Should contract design induce an agent to conduct a precontractual investigation even though, in any case, the agent will become fully informed after the signing of the contract? This paper shows that imperfect investigations might be encouraged. The result stands in contrast to previous studies, which focus on perfect investigations. The contrast exists because if precontractual investigation is perfect, the benefits of sequential screening vanish.

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