Monitoring Teams

Department of Economics & Decision Sciences

Guest speaker :  Marina Halac (Yale)

Zoom videoconference

A principal faces a sequence of agents. In each period, she observes a public signal of the agent's value and makes a demand. The principal threatens to extract the agent's full value if he rejects, but she can execute a limited number of threats. We show that optimal demands are increasing in agents' signals if signals are fully informative or the principal can commit to threats. However, under asymmetric information and limited commitment, demands are decreasing over a range: the principal is more aggressive towards lower-expected-value agents to make threats credible. Limited commitment hurts the principal but also certain agents.

Joint work with Ilan Kremer et Eyal Winter.

Link Zoom  https://hec-fr.zoom.us/j/96303337716