Abstract
This paper studies a repeated principal-agent relationship in which the agent, who we refer to as the expert, both collects information and makes investment decision on behalf of the principal, utilizing both his private information and publicly available information. The optimal relational contract may induce the expert to be somewhat resistant to the public information, which we interpret as a form of stubbornness. For intermediate discount factors, it is optimal for the principal to induce such stubborn behavior in the expert when the publicly available information is neither too precise nor too imprecise. On the other hand, in contrast to findings in the related literature, it is never optimal to induce conservative utilization of the expert’s private signal.