But who will monitor the monitor

Research output: Contribution to journalReview article

38 Scopus citations

Abstract

Suppose that providing incentives for a group of individuals in a strategic context requires a monitor to detect their deviations. What about the monitor's deviations? To address this question, I propose a contract that makes the monitor responsible for monitoring, and thereby provides incentives even when the monitor's observations are not only private, but costly, too. I also characterize exactly when such a contract can provide monitors with the right incentives to perform. In doing so, I emphasize virtual enforcement and suggest its implications for the theory of repeated games.

Original languageEnglish (US)
Pages (from-to)2767-2797
Number of pages31
JournalAmerican Economic Review
Volume102
Issue number6
DOIs
StatePublished - Oct 1 2012

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