Communication in Agencies

John Christensen

Bell Journal of Economics, 1981, vol. 12, issue 2, 661-674

Abstract: In this article the value of communications structures is considered in an agency model with differential information. The optimal compensation to the agent is characterized, and it is shown that this characterization is related to the accountant's use of the budget as a motivation device. Within our framework, we discuss the relationship between the content of information systems supplied to the agent privately and the agency's well-being. It is shown that the agency is not always better off if the agent is supplied with more information, since he might use that information to shirk.

Date: 1981
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