Negative Value Of Information In An Informed Principal Problem With Independent Private Values.

This note demonstrates that in a principal-agent environment with independent private values and generic payoffs, the mechanism implemented by an informed principal is not ex-ante optimal. This result implies that in (generic) settings where the principal can covertly acquire private information before selecting a mechanism, she will fail to select an ex-ante optimal mechanism. Furthermore, the principal is indifferent whether to become informed before or after selecting a mechanism.