Mediated audits

Pollrich, Martin

doi:10.1111/1756-2171.12167

Cited by 7 publications

(8 citation statements)

References 42 publications

(83 reference statements)

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“…22 However, if type spaces become more complicated, the explicit derivation of strategies in the negotiation game becomes 22 One way to overcome the problems associated with mixed strategies of the agent is to introduce a mediator that translates (pure-strategy) messages of the agent into a noisy signal to the principal. Examples for this approach include (but are not limited to) Pollrich (2016), Strausz (2012), andVartiainen (2013).…”

Section: Resultsmentioning

confidence: 99%

Contract (Re-)Negotiation with Private and Common Values

Gretschko

Wambach

2017

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. CONTRACT (RE-)NEGOTIATION WITH PRIVATE AND COMMON VALUES VITALI GRETSCHKO AND ACHIM WAMBACH ZEW MANNHEIM AND UNIVERSITY OF MANNHEIMAbstract. We analyze the contracting problem of a principal who faces an agent with private information and cannot commit to not renegotiating a chosen contract. We model this by allowing the principal to propose new contracts any number of times after observing the contract choice of the agent. We propose a characterization of renegotiation-proof states of this (re-)negotiation and show that those states are supported by a perfect Bayesian equilibrium of an infinite horizon game. The characterization of renegotiation-proof states provides a tool, which is both powerful and simple to use, for finding such states in specific environments. We proceed by applying the results to adverse selection environments with private and common values. We show that with private values and common values of the 'Spence' type only, fully efficient and separating states can be renegotiation-proof. With common values of the "Rothschild-Stiglitz" type inefficient and (partial) pooling states may be renegotiation-proof.JEL classification: C73, C78, D82

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Section: Resultsmentioning

confidence: 99%

Contract (Re-)Negotiation with Private and Common Values

Gretschko

Wambach

2017

SSRN Journal

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“…But, it is an open question how this affects competitive screening by education in equilibrium. An analysis in this direction will provide interesting insights in comparison to the existing contributions on auditing, e.g., Khalil and Lawarrée (1995), Khalil (1997) as well as Pollrich (2017), who study screening with auditing by a monopolistic mechanism designer. Ball and Kattwinkel (2019) generalize this setting by considering general and type-specific audits.…”

Section: Discussionmentioning

confidence: 99%

“…In comparison to the standard auditing models (see, for example, Pollrich, 2017), our signaling environment changes the auditing pattern and "whom to audit". In the standard model, firms audit the applicants for the most appealing contract offer.…”

Section: Introductionmentioning

confidence: 99%

Signaling versus Auditing

Bester

Lang

2019

SSRN Journal

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We analyze a competitive labor market in which workers signal their productivities through education à la Spence (1973), and firms have the option of auditing to learn workers' productivities. Audits are costly and non-contractible. We characterize the trade-offs between signaling by workers and costly auditing by firms. Auditing is always associated with (partial) pooling of worker types, and education is used as a signal only if relatively few workers have low productivity. Our results feature new auditing patterns and explain empirical observations in labor economics like wage differentials and comparative statics of education choices. Our analysis applies also to other signalling problems, e.g., the financial structure of firms, warranties, and initial public offerings. JEL-Codes: D820, D860.

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“…A complete characterization of the optimal mechanism under limited commitment lies beyond the scope of this manuscript. There are several technical hurdles rendering the problem intractable, see for instance Laffont and Tirole (1990), Bester and Strausz (2001) and Pollrich (2017).…”

Section: Mechanism Designmentioning

confidence: 99%

Sequential Procurement with Limited Commitment

2019

Self Cite

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We analyze the problem of a buyer who chooses a supplier for a long-term relationship via an auction. The buyer lacks commitment to not renegotiate the terms of the contract in the long run. Thus, suppliers are cautious about the information revealed during the auction. We show theoretically and experimentally that first-price auctions perform poorly in terms of efficiency and buyer surplus. Suppliers may pool on a high bid to conceal information. Second-price auctions retain their efficient equilibrium and generate substantial surplus for the buyer. We demonstrate that optimal mechanisms require concealing the winning bid with a strictly positive probability.

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Mediated audits

Cited by 7 publications

References 42 publications

Contract (Re-)Negotiation with Private and Common Values

Contract (Re-)Negotiation with Private and Common Values

Signaling versus Auditing

Sequential Procurement with Limited Commitment

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