# Information Design in the Principal-Agent Problem

arXiv: https://arxiv.org/abs/2209.13688 · HTML: https://mlsanity.com/paper/2209.13688/

## Key facts

- Cited by 3 papers in the map (data through 14 Oct 2026).
- First posted on arXiv 27 Sep 2022.

## Built on by (most cited first, 3 of 3)

- [Algorithmic Collusion and the Complexity of Information-Value-Free Equilibria](https://mlsanity.com/paper/2609.22757/) (2026)
- [Scalable Principal-Agent Contract Design via Gradient-Based Optimization](https://mlsanity.com/paper/2510.21177/) (2025)
- [Adaptive Contracts for Cost-Effective AI Delegation](https://mlsanity.com/paper/2603.17212/) (2026)

## Abstract (arXiv)

We study a variant of the principal-agent problem in which the principal does not directly observe the agent's effort outcome; rather, she gets a signal about the agent's action according to a variable information structure designed by a regulator. We consider both the case of a risk-neutral and of a risk-averse agent, focusing mainly on a setting with a limited liability assumption. We provide a clean characterization for implementability of actions and utility profiles by any information structure, which turns out to be simple thresholds on the utilities. We further study naturally constrained information structures in which the signal emitted from any action is either the action itself or some actions nearby. We show that the worst implementable welfare deteriorates gracefully as the information structure becomes noisier. Finally, we show that our clean characterization does not generalize to a larger class of signaling constraints. In fact, even deciding whether a certain action is implementable by some constrained information structure from this class is NP-complete in the general setting.