Journal article
Gaming and strategic opacity in incentive provision
- Abstract:
- We study the benefits and costs of “opacity” (deliberate lack of transparency) of incentive schemes as a strategy to combat gaming by better informed agents. In a two‐task moral hazard model in which only the agent knows which task is less costly, the agent has an incentive to focus his effort on the less costly task. Opaque schemes, which make a risk‐averse agent uncertain about which task will be more highly rewarded, mitigate such gaming but impose more risk. We identify environments in which opaque schemes not only dominate transparent ones, but also eliminate the costs of the agent's hidden information.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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- Files:
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(Preview, Accepted manuscript, pdf, 1.0MB, Terms of use)
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- Publisher copy:
- 10.1111/1756-2171.12253
Authors
- Publisher:
- Wiley
- Journal:
- RAND Journal of Economics More from this journal
- Volume:
- 49
- Issue:
- 4
- Pages:
- 819-85
- Publication date:
- 2018-09-26
- Acceptance date:
- 2018-04-06
- DOI:
- EISSN:
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1756-2171
- ISSN:
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0741-6261
- Language:
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English
- Keywords:
- Pubs id:
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pubs:601323
- UUID:
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uuid:5eb99369-e879-49ae-b44f-b3b0a9caf127
- Local pid:
-
pubs:601323
- Source identifiers:
-
601323
- Deposit date:
-
2018-11-20
Terms of use
- Copyright holder:
- RAND Corporation
- Copyright date:
- 2018
- Rights statement:
- Copyright © 2018, The RAND Corporation.
- Notes:
- This is the accepted manuscript version of the article. The final version is available online from Wiley at https://doi.org/10.1111/1756-2171.12253
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