The One Who Controls the Information Appropriates Its Rents

We analyze a Principal-Agent model where the Principal can influence the precision of the Agent's private information by releasing, without observing, additional signals that refine the Agent's initial private type-estimate. We derive the Principal's optimal contract, whose terms incorporate an information disclosure policy, and characterize its properties. We show that in the optimal contract, the Principal always releases the information that she controls. Moreover, we show that the Principal is able to implement the same allocation and obtain the same utility as if she could observe the realizations of the additional signals.