American Economic Review Vol. 102 No. 6 2012
But Who Will Monitor the Monitor?
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.
- DOI
- 10.1257/aer.102.6.2767
- Volume
- 102
- Issue
- 6
- Pages
- 2767-2797
- Language
- en
- Sources
- crossref openalex bibtex:phds-export.bib