Econometric Society 57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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DECISION RULES AND INFORMATION PROVISION: MONITORING VS MANIPULATION


Category: Economic Theory
Contract Theory I
Sunday 25th August 2002, 14:30 - 16:00, Room: 1.8
Session Chair(s): Giuliana Palumbo, Getulio Vargas Foundation and EUI, BRAZIL

Presenter(s): Palumbo, Giuliana

Co-Author(s): Iossa, Elisabetta

Keyword(s): Discretion, Information provision, Manipulation, Monitoring, Rules

JEL(s): D74, K41, L44

Abstract:

The paper focuses on the organization of institutions designed to resolve disputes between two parties, when contracts are incomplete and decision makers have vested preferences. It shows that the choice of the discretionary power to grant to the decision maker and who provides the necessary information are intrinsically related. Direct involvement of the interested parties in the supply of information contributes to enhance monitoring of the decision maker. Thus, it is desirable when the latter is granted high discretion. Conversely, when the decision maker has little discretional power, information provision is better assigned to agents with no direct stake. The analysis helps to rationalize some organizational arrangements that are commonly observed in the context of judicial and antitrust decision-making.


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Paper Reference Number: 903

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57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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