Economics at your fingertips  

Transparency and Performance Evaluation in Sequential Agency

Sususmu Cato () and Akifumi Ishihara

Journal of Law, Economics, and Organization, 2017, vol. 33, issue 3, 475-506

Abstract: This study investigates the effects of transparency in a sequential moral hazard problem, where a leader and a follower consecutively take an action. The principal chooses whether the organization is transparent or opaque, by which we mean that the action of the leader is observable to the follower or not. Compared with the opaque organization, the transparent organization imposes an additional incentive constraint on the follower but may relax the incentive constraint on the leader. Informativeness of the signal crucially affects the optimal degree of transparency as well as the optimal incentive scheme. The transparent (respectively, opaque) organization tends to be preferred when the optimal incentive contract exhibits joint (respectively, relative) performance evaluation.

JEL-codes: D86 J41 D20 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link) (application/pdf)
Access to full text is restricted to subscribers.

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:

Ordering information: This journal article can be ordered from

Access Statistics for this article

Journal of Law, Economics, and Organization is currently edited by Pablo T. Spiller

More articles in Journal of Law, Economics, and Organization from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().

Page updated 2020-01-06
Handle: RePEc:oup:jleorg:v:33:y:2017:i:3:p:475-506.