The not-so-secret-agent: Professional monitors, hierarchies and implementation

Sandeep Baliga*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

It is well-known that, when agents in an organization possess private information that is unverifiable by an outside party, games where agents simply announce their information can have multiple equilibria that may impede the successful implementation of the organization's objectives. We show that the introduction of a professional monitor (e.g. auditor, regulator, supervisor) can help to destroy the "bad" equilibria when agents have private information but have incomplete information about others' information.

Original languageEnglish (US)
Pages (from-to)17-26
Number of pages10
JournalReview of Economic Design
Volume7
Issue number1
DOIs
StatePublished - 2002

Keywords

  • Implementation
  • Incomplete information
  • Perfect Bayesian equilibrium

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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