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14.06. BGSE Micro Workshop: Peter Wagner

BGSE Micro Workshop with Peter Wagner (University of Bonn)

Event details
What
  • BGSE Workshop
When Jun 14, 2017
from 12:00 to 13:00
Where Room 0.017
Contact Name Stephan Lauermann
Contact Email
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Topic

Incentives for quality with costly inspections

 

Abstract

This paper studies enforcement policies without commitment in a dynamic principal-agent setting with costly monitoring. The agent's private effort affects transitions in ``quality'' which evolves stochastically over time according to a two-state Markov chain. The principal schedules inspections and imposes fines based on inspection outcomes and the agent's unverifiable reports. The optimal enforcement policy features deterministic inspection cycles which are suspended in periods in which the agent reports low quality.

 


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