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On Transparency in Organizations

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  • Philippe Jehiel

Abstract

When is it best for the Principal to commit to not disclosing all that he/she knows in moral hazard interactions? I show that whenever the Agent would choose the same action under complete information at several distinct states, then full transparency can generically be improved upon. This implies that full transparency is generically suboptimal whenever the dimension of the information held by the Principal exceeds the dimension of the Agent's action. In a simple class of problems, I make further progress on the best disclosure policy assuming the Principal can either disclose fully the state or remain silent.

Suggested Citation

  • Philippe Jehiel, 2015. "On Transparency in Organizations," Review of Economic Studies, Oxford University Press, vol. 82(2), pages 736-761.
  • Handle: RePEc:oup:restud:v:82:y:2015:i:2:p:736-761
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    File URL: http://hdl.handle.net/10.1093/restud/rdu040
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    1. repec:eee:eecrev:v:98:y:2017:i:c:p:189-198 is not listed on IDEAS
    2. Hao Li & Xianwen Shi, 2017. "Discriminatory Information Disclosure," American Economic Review, American Economic Association, vol. 107(11), pages 3363-3385, November.
    3. Robert Dur & Heiner Schmittdiel, 2013. "Paid to Quit," Tinbergen Institute Discussion Papers 13-174/VII, Tinbergen Institute, revised 07 Dec 2015.
    4. Vanessa, Mertins & Jeworrek, Sabrina & Vlassopoulos, Michael, 2018. ""The Good News about Bad News": Feedback about Past Organisational Failure Bad ist Impact in Worker Productivity," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181644, Verein für Socialpolitik / German Economic Association.
    5. Bianchi, Milo & Jehiel, Philippe, 2015. "Financial reporting and market efficiency with extrapolative investors," Journal of Economic Theory, Elsevier, vol. 157(C), pages 842-878.
    6. Jeworrek, Sabrina & Mertins, Vanessa & Vlassopoulos, Michael, 2018. ""The good news about bad news": Feedback about past organisational failure and its impact on worker productivity," IWH Discussion Papers 1/2018, Halle Institute for Economic Research (IWH).

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