When (not) to publicize inspection results
We consider a dynamic inspection problem between a principal and several agents. The principal observes the full inspection history, whereas each agent only observes inspections imposed on himself. When inspection resources are limited, the inspection intensities for agents are negatively correlated...
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| Published in: | Journal of economic theory Vol. 210; p. 105667 |
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| Main Authors: | , |
| Format: | Journal Article |
| Language: | English |
| Published: |
Elsevier Inc
01-06-2023
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| Subjects: | |
| Online Access: | Get full text |
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| Summary: | We consider a dynamic inspection problem between a principal and several agents. The principal observes the full inspection history, whereas each agent only observes inspections imposed on himself. When inspection resources are limited, the inspection intensities for agents are negatively correlated, and hence each agent cares not only about his own inspection history, but also about the inspection histories of the other agents. In such cases, should the principal publicly reveal past inspection history, or should she conceal this information? We show that the principal benefits from concealing inspection history. Nevertheless, this benefit becomes less significant as the number of agents increases, and disappears in the limit case with a continuum of agents. |
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| ISSN: | 0022-0531 1095-7235 |
| DOI: | 10.1016/j.jet.2023.105667 |