Mutual Monitoring and Best Agency Contracts

Paul E. Fischer and John S. Hughes

Journal of Institutional and Theoretical Economics (JITE), 1997, vol. 153, issue 2, 334-

Abstract: We consider the design of contracts in a principal-agent setting with two agents where each agent privately observes and reports to the principal a signal regarding the actions taken. We consider two cases: one where the agents observe the same signal and one where the agents observe different signals. For each case we show that, under certain conditions, truthful reporting and desired actions can be implemented at no or nearly no additional compensation cost above that incurred when the agents' signals are contractible public information.

JEL-codes: C72 D82 (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (5)

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