Reservation wage and optimal contract for experts

We examine the optimal contract for experts with type-dependent reservation wage. We show that Bhattacharya and Pfleiderer (1985)’s result, the possibility of achieving the truthful revelation of information with full surplus extraction, can be achieved with relaxing the restriction on the shape of reservation wage schedules. This outcome can be achieved through payoff functions that are affine in a convex transformation of the ex-post error. Our result is applied to the case of multiple experts. ► We investigate optimal contract for experts with type-dependent reservation wage. ► We propose a contract that achieves the truthful reports with full surplus extraction. ► The contract is an affine form of some convex transformation of the ex-post error.