Commitment versus Flexibility with Costly Verification

• 成果类型: Article
• 署名作者: Halac, Marina; Yared, Pierre
• 署名单位: Yale University; Center for Economic & Policy Research (CEPR); Columbia University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/710560
• 发表日期: 2020
• 页码: 4523-4573
• 关键词: collective dynamic choice; CAPITAL-BUDGETING PROCESS; Optimal allocation; fiscal rules; DELEGATION; DISCRETION; implementation; INFORMATION; CONTRACTS; escape

摘要

A principal faces an agent who is better informed but biased toward higher actions. She can verify the agent's information and specify his permissible actions. We show that if the verification cost is small enough, a threshold with an escape clause (TEC) is optimal: the agent either chooses an action below a threshold or requests verification and the efficient action above the threshold. For higher costs, however, the principal may require verification only for intermediate actions, dividing the delegation set. TEC is always optimal if the principal cannot commit to inefficient allocations following the verification decision and result.