Optimal transparency of monitoring capability

• 成果类型: Article
• 署名作者: Tan, Teck Yong
• 署名单位: University of Nebraska System; University of Nebraska Lincoln
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2023.105620
• 发表日期: 2023
• 关键词: Information design; Inspection game; Monitoring capability

摘要

This paper studies information design in an inspection game. A principal first privately decides whether to acquire a costly monitoring capability that is needed to detect shirking by an agent; subsequently, the agent decides whether to work or shirk. I show that overall efficiency can be improved by providing the agent with a partially - instead of fully - informative signal about the principal's decision; however, the resulting equilibrium involves the agent shirking with a positive probability and all the efficiency gained is captured by the agent. Overall efficiency can be further improved by providing the principal with private information about the signal generating process; this additional feature also allows the principal to capture the efficiency gained. The analysis sheds light on the extent to which information control can be used to improve monitoring efficiency in such inspection games.(c) 2023 Elsevier Inc. All rights reserved.