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

Author

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  • Sandeep Baliga

    () (Kellogg GSM , 2001 Sheridan Road, Evanston IL 60208-2009, USA)

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 info rmation about others' information.

Suggested Citation

  • Sandeep Baliga, 2002. "The not-so-secret-agent: Professional monitors, hierarchies and implementation," Review of Economic Design, Springer;Society for Economic Design, vol. 7(1), pages 17-26.
  • Handle: RePEc:spr:reecde:v:7:y:2002:i:1:p:17-26 Note: Received: 21 May 1998 / Accepted: 26 May 2000
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    Cited by:

    1. Alex Gershkov & Eyal Winter, 2015. "Formal versus Informal Monitoring in Teams," American Economic Journal: Microeconomics, American Economic Association, pages 27-44.

    More about this item

    Keywords

    Perfect Bayesian equilibrium; implementation; incomplete information;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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