Dynamic Mediation and Moral Hazard: From Private To Public Communication

Allen Vong

Papers from arXiv.org

Abstract: I study how a firm uses mediated communication with a worker and its clients to maximize worker performance over time. I find that optimal mediation initially prescribes private communication and eventually transitions to public communication: it involves occasional randomizations early on, known to the worker but kept secret from clients, between two continuations. In one, the worker cuts corner and then retains his current continuation utility. In the other, the worker exerts effort and then receives the highest continuation equilibrium utility less a minimal penalty for underperformance. These randomizations eventually disappear, replaced by canonical carrot-and-stick incentives.

Date: 2025-11, Revised 2025-11
New Economics Papers: this item is included in nep-mic and nep-upt
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2511.02436 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2511.02436

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().