Monitor Reputation and Transparency

Iván Marinovic and Martin Szydlowski

American Economic Journal: Microeconomics, 2023, vol. 15, issue 4, 1-67

Abstract: We study the disclosure policy of a regulator overseeing a monitor with reputation concerns. The monitor faces a manager, who chooses how much to manipulate based on the monitor's reputation. Reputational incentives are strongest for intermediate reputations. Instead of providing transparency, the regulator's disclosure policy aims to keep the monitor's reputation intermediate, even at the cost of diminished incentives. Beneficial schemes feature random delay or noisy information. Schemes that feature verifiable disclosure destroy reputational incentives. The regulator discloses more aggressively when she has better enforcement tools.

JEL-codes: D82 D83 G21 G28 G38 M42 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1257/mic.20220006

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