But Who Will Monitor the Monitor?

• 成果类型: Article
• 署名作者: Rahman, David
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.102.6.2767
• 发表日期: 2012
• 页码: 2767-2797
• 关键词: belief-free equilibria; repeated games; moral hazard; interdependent valuations; mechanism design; folk theorem; COMMUNICATION; INFORMATION; EFFICIENCY; surplus

摘要

Suppose that providing incentives for a group of individuals in a strategic context requires a monitor to detect their deviations. What about the monitor's deviations? To address this question, I propose a contract that makes the monitor responsible for monitoring, and thereby provides incentives even when the monitor's observations are not only private, but costly, too. I also characterize exactly when such a contract can provide monitors with the right incentives to perform. In doing so, I emphasize virtual enforcement and suggest its implications for the theory of repeated games. (JEL C78, D23, D82, D86)