The informativeness principle tells us that: one must use as much information as possible to develop compensation contracts, even if the cost of obtaining the information is unreasonable:
a. information is overrated because employees can always lie about their performance, and detecting is costly and counter-productive
b. you must use as much information as possible to develop compensation contracts, as long as the cost of obtaining the information is reasonable
c. one must only use information that is necessary to develop compensation contracts, as long as the cost of obtaining the information is reasonable
