vaIuabIe private information Retum, again, to the example in Table 21.1. Suppose no information is available, and the owner desires supply of input H. Determine an optimal pay-forperfonnanee arrangement, and contrast it with the Table 21.2 case where the information is privately obtained by the manager but not communicated. How mueh would the risk neutraI owner pay for the manager to observe the environment before acting? Does this amount depend on whether communication is feasible? Why?

AppendixLO1