Optimal contracts boost productivity in the face of information asymmetry.
The study explores how information affects economic growth. It suggests that when people don't have all the information, it's good to link some of their pay to their performance. But not all pay should depend on performance, because people don't like taking risks. So, the best pay system balances risk and motivation. Overall, when information is uneven, people work less hard and produce less than when information is equal.