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.
- Incomplete information
- Perfect Bayesian equilibrium
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)