IDEAS home Printed from https://ideas.repec.org/p/crf/wpaper/08-01.html
   My bibliography  Save this paper

Moral Hazard: Messages, Delegation and Efficiency

Author

Listed:
  • Andrea Attar
  • Eloisa Campioni
  • Gwenaël Piaser

    () (Luxembourg School of Finance, University of Luxembourg)

  • Uday Rajan

Abstract

A the present paper we show that messages may improve efficiency even in model of complete information. Messages are useful two main reasons. First, if the principal is not allowed to use stochastic mechanisms, mechanisms with messages can induced mixed strategies and hence indirectly a stochastic outcome. Second, even if stochastic mechanisms are allowed, messages can allow correlation between efforts and outcome. We then argue that indirect mechanisms can be interpreted as delegation and show how simple indirect mechanisms can improve efficiency in a simple model of moral hazard.

Suggested Citation

  • Andrea Attar & Eloisa Campioni & Gwenaël Piaser & Uday Rajan, 2008. "Moral Hazard: Messages, Delegation and Efficiency," LSF Research Working Paper Series 08-01, Luxembourg School of Finance, University of Luxembourg.
  • Handle: RePEc:crf:wpaper:08-01
    as

    Download full text from publisher

    File URL: http://www.lsf.lu/eng/content/download/496/2692/file/08-01.pdf
    Download Restriction: no

    More about this item

    Keywords

    Efficiency; Moral Hazard; Messages; Correlated Equilibrium; Recommendation; Delegation.;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    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:crf:wpaper:08-01. 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: (Martine Zenner). General contact details of provider: http://edirc.repec.org/data/sfsculu.html .

    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.

    We have no references for this item. You can help adding them by using 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.