IDEAS home Printed from
   My bibliography  Save this paper

Incentives in Common Agency


  • Bernard Sinclair-Desgagné


This paper considers situations where an agent must allocate his nonobservable effort among several tasks and where several principals hold diverging viewpoints on what the best allocation should be. Economic theory currently sees each of these features as major obstacles to raising the strength of an agent s incentives. This paper proposes a simple scheme - based on contingent monitoring - that can nevertheless mitigate both of these obstacles simultaneously. Under this scheme, if the agent s absolute risk aversion decreases fast enough with respect to wealth, then the principals would coordinate their respective incentive provision so that the agent would also see his various tasks as complementary (instead of substitute) income-enhancing activities. Furthermore, coordination could be achieved in a somewhat liberal or decentralized way, in the sense that some principals would need to control only the tasks they have assigned to the agent. Potential applications to corporate compliance, the organization of government, and the management of innovation are briefly discussed. Nous étudions les situations où (1) un agent doit distribuer ses efforts (qui ne peuvent être observés par des tiers) sur différentes tâches et où (2) plusieurs parties prenantes ont des points de vue divergents quant à la distribution la plus souhaitable. La théorie économique prédit actuellement que chacun de ces ingrédients la présence de tâches multiples et la concurrence entre parties prenantes -suffit à lui seul à abaisser considérablement la puissance des incitations. Ce papier propose néanmoins un remède simple, via l utilisation d audits contingents. Le mécanisme proposé rendrait en effet les tâches complémentaires du point de vue de l agent ; en même temps, les parties prenantes parviendraient à se coordonner pour le mettre en oeuvre, à condition que l aversion au risque de l agent décroisse suffisamment vite avec l augmentation de sa richesse. Cette coordination pourrait par ailleurs se réaliser d une manière «libérale», en ce sens que certaines parties prenantes n auraient besoin de contrôler que les tâches les intéressant directement. Certaines utilisations possibles du mécanisme pour les régimes de conformité des entreprises, l organisation des gouvernements, et le management de l innovation sont brièvement esquissées., nous trouvons des changements dans la dynamique et dans la mémoire longue de la volatilité.

Suggested Citation

  • Bernard Sinclair-Desgagné, 2001. "Incentives in Common Agency," CIRANO Working Papers 2001s-66, CIRANO.
  • Handle: RePEc:cir:cirwor:2001s-66

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January.
    2. Nathalie de Marcellis-Warin & Erwann Michel-Kerjan, 2001. "The Public-Private Sector Risk-Sharing in the French Insurance "Cat. Nat. System"""," CIRANO Working Papers 2001s-60, CIRANO.
    3. John M. Maheu & Thomas H. McCurdy, 2002. "Nonlinear Features of Realized FX Volatility," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 668-681, November.
    4. Christoffersen, Peter & Ghysels, Eric & Swanson, Norman R., 2002. "Let's get "real" about using economic data," Journal of Empirical Finance, Elsevier, vol. 9(3), pages 343-360, August.
    5. Bernheim, B Douglas & Whinston, Michael D, 1986. "Common Agency," Econometrica, Econometric Society, vol. 54(4), pages 923-942, July.
    Full references (including those not matched with items on IDEAS)


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

    Cited by:

    1. Trommetter, M., 2008. "Intellectual property rights in agricultural and agro-food biotechnologies to 2030 (© OECD International Futures Programme)," Working Papers 200805, Grenoble Applied Economics Laboratory (GAEL).

    More about this item


    Multitasking; several principals; upper-tail audits; Principal-agent; multi-tâches; plusieurs principaux; audits;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cir:cirwor:2001s-66. 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: (Webmaster). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.