  We study the classic principal-agent model when the signal observed by the
principal is chosen by the agent. We fully characterize the optimal information
structure from an agent's perspective in a general moral hazard setting with
limited liability. Due to endogeneity of the contract chosen by the principal,
the agent's choice of information is non-trivial. We show that the agent's
problem can be mapped into a geometrical game between the principal and the
agent in the space of likelihood ratios. We use this representation result to
show that coarse contracts are sufficient: The agent can achieve her best with
binary signals. Additionally, we can characterize conditions under which the
agent is able to extract the entire surplus and implement the first-best
efficient allocation. Finally, we show that when effort and performance are
one-dimensional, under a general class of models, threshold signals are
optimal. Our theory can thus provide a rationale for coarseness of contracts
based on the bargaining power of the agent in negotiations.
