MLSE Seminar: Christopher Stapenhurst

Date: Monday, March 2nd

Presenter: Christopher Stapenhurst

Authors: Christopher Stapenhurst, Andrew Clausen (University of Edinburgh)

Title: Moral hazard with Multiple Monitors and Random Incentives

Abstract: I study optimal incentive design in moral hazard problems where an agent can bribe the monitor(s). If there is no limit to the number of monitors that the agent can bribe and if the designer is restricted to deterministic mechanisms, then she typically prefers to hire just one monitor, even if additional monitors are available. If the designer can commit to stochastic mechanisms involving a single monitor then she can frustrate bribery attempts by creating informational asymmetries between the agent and monitor. What happens if the designer can commit to stochastic mechanisms involving multiple monitors? I expect to find that she hires hires more monitors because bribery attempts involving many players are even more easily frustrated by the presence of asymmetric information. In this presentation I will focus on my results pertaining to the case with a stochastic mechanisms involving a single monitor before discussing how to model collusion involving multiple players with asymmetric information.