TY - JOUR
T1 - But who will monitor the monitor
AU - Rahman, David
PY - 2012/10/1
Y1 - 2012/10/1
N2 - 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.
AB - 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.
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U2 - 10.1257/aer.102.6.2767
DO - 10.1257/aer.102.6.2767
M3 - Review article
AN - SCOPUS:84867709773
SN - 0002-8282
VL - 102
SP - 2767
EP - 2797
JO - American Economic Review
JF - American Economic Review
IS - 6
ER -