Screening ethics when honest agents keep their word

Alger, Ingela and Renault, Régis (2007) Screening ethics when honest agents keep their word. Economic Theory, 30. pp. 291-311.

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Official URL: http://tse-fr.eu/pub/26842

Abstract

Using a principal-agent setting, we introduce honesty that requires pre-commitment. The principal offers a menu of mechanisms to screen ethics. Agents may misrepresent ethics. Dishonest agents may misrepresent the match with the assigned task (good or bad), while honest agents reveal the match honestly if they have pre-committed. Ethics-screening, that allows for match-screening with dishonest agents while leaving a lower rent to honest agents, is optimal if both honesty and a good match are likely. Otherwise the optimal mechanism is the standard second-best or the first-best (where dishonest agents misrepresent the match), if dishonesty is likely or unlikely respectively.

Item Type: Article
Language: English
Date: February 2007
Refereed: Yes
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:33
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:26842
URI: http://publications.ut-capitole.fr/id/eprint/15517

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