Advanced Search
MyIDEAS: Login to save this article or follow this journal

Auditing Without Commitment

Contents:

Author Info

  • Fahad Khalil
Registered author(s):

    Abstract

    I study the optimal contract when a principal cannot commit to an audit. The contract must provide incentives for the agent to comply as well as for the principal to audit. The key tradeoff is efficiency versus noncompliance instead of the familiar rent versus efficiency. Information rent is zero whether production cost is high or low. For high production cost, the agent is asked to produce greater than the amount under full information. The probability of audit is higher when the principal cannot commit compared to when he can.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://links.jstor.org/sici?sici=0741-6261%28199724%2928%3A4%3C629%3AAWC%3E2.0.CO%3B2-4&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by The RAND Corporation in its journal RAND Journal of Economics.

    Volume (Year): 28 (1997)
    Issue (Month): 4 (Winter)
    Pages: 629-640

    as in new window
    Handle: RePEc:rje:randje:v:28:y:1997:i:winter:p:629-640

    Contact details of provider:
    Web page: http://www.rje.org

    Order Information:
    Web: https://editorialexpress.com/cgi-bin/rje_online.cgi

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Parikshit Ghosh, 2009. "Making the Punishment Fit the Crime or Taliban Justice? Optimal Penalties Without Commitment," Working papers, Centre for Development Economics, Delhi School of Economics 175, Centre for Development Economics, Delhi School of Economics.
    2. Taylor, Curt, 2004. "Privacy and Information Acquisition in Competitive Markets," Berkeley Olin Program in Law & Economics, Working Paper Series, Berkeley Olin Program in Law & Economics qt5hk0k89w, Berkeley Olin Program in Law & Economics.
    3. Stefan ARPING,, 2002. "Playing Hardball: Relationship Banking in the Age of Credit Derivatives," FAME Research Paper Series, International Center for Financial Asset Management and Engineering rp49, International Center for Financial Asset Management and Engineering.
    4. Cole, Harold L., 2013. "Self-enforcing stochastic monitoring and the separation of claims," Journal of Monetary Economics, Elsevier, Elsevier, vol. 60(6), pages 632-649.
    5. Hsiao-Chi Chen & Shi-Miin Liu & Chiung-Yun Chang, 2013. "Commitment or no-commitment to monitoring in emission tax systems?," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(2), pages 171-188, April.
    6. Boyer, Martin, 2001. "Les clauses de valeur à neuf sont-elles optimales?," L'Actualité Economique, Société Canadienne de Science Economique, Société Canadienne de Science Economique, vol. 77(1), pages 53-74, mars.
    7. Alexander Koch & Eloïc Peyrache, 2008. "Mixed up? that’s good for motivation," Economic Theory, Springer, Springer, vol. 34(1), pages 107-125, January.
    8. Nell, Martin & Schiller, Jörg, 2002. "Erklärungsansätze für vertragswidriges Verhalten von Versicherungsnehmern aus Sicht der ökonomischen Theorie," Working Papers on Risk and Insurance, University of Hamburg, Institute for Risk and Insurance 7, University of Hamburg, Institute for Risk and Insurance.
    9. Crémer, Jacques, 2010. "Solving the "selective intervention" puzzle," TSE Working Papers, Toulouse School of Economics (TSE) 10-145, Toulouse School of Economics (TSE).
    10. Kim, Doyoung, 2013. "Delegation of information verification," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(5), pages 488-500.
    11. Suzanne H. Bijkerk & Vladimir A. Karamychev & Otto H. Swank, 2013. "Aggressive Reporting and Probabilistic Auditing in a Principles-Based Environment," Tinbergen Institute Discussion Papers, Tinbergen Institute 13-131/VII, Tinbergen Institute.
    12. Burnett, Johann Caro & Carrasco, Vinicius, 2011. "Coordination and the provision of incentives to a common regulated firm," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 29(5), pages 606-627, September.
    13. Jeremy M. Burke & Curtis R. Taylor & Liad Wagman, 2012. "Information Acquisition in Competitive Markets: An Application to the US Mortgage Market," American Economic Journal: Microeconomics, American Economic Association, American Economic Association, vol. 4(4), pages 65-106, November.
    14. Thomas Kirchmaier & Mariano Selvaggi, 2006. "The dark side of 'good' corporate governance: compliance-fuelled book-cooking activities," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 24513, London School of Economics and Political Science, LSE Library.
    15. Kuhn, Michael & Siciliani, Luigi, 2013. "Manipulation and auditing of public sector contracts," European Journal of Political Economy, Elsevier, Elsevier, vol. 32(C), pages 251-267.
    16. Langinier, Corinne & Marcoul, Philippe, 2007. "Patents, Search of Prior Art, and Revelation of Information," Staff General Research Papers, Iowa State University, Department of Economics 10489, Iowa State University, Department of Economics.
    17. Luc E. Leruth & Elisabeth Paul, 2006. "A Principal-Agent Theory Approach to Public Expenditure Management Systems in Developing Countries," IMF Working Papers, International Monetary Fund 06/204, International Monetary Fund.
    18. Lindenthal, Sabine, 2000. "Der Einfluss der Organisationsstruktur auf die Leistungskontrolle," Quint-Essenzen, Institute for Labour Law and Industrial Relations in the European Community (IAAEG), University of Trier 62, Institute for Labour Law and Industrial Relations in the European Community (IAAEG), University of Trier.
    19. Aubert, Cécile, 2009. "Managerial Effort Incentives and Market Collusion," TSE Working Papers, Toulouse School of Economics (TSE) 09-127, Toulouse School of Economics (TSE).

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:rje:randje:v:28:y:1997:i:winter:p:629-640. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.