TY - JOUR
AU - Sobel,, Joel
AB - Abstract A risk neutral principal wishes to exact a payment from a risk neutral agent whose wealth he does not know, but may verify through a costly auditing procedure. We characterize efficient schemes for the principal when he is allowed to choose schedules for preaudit and postaudit payments and audit probabilities, subject to the constraint that only monetary incentives can be used and that the principal may never make a net payment to the agent. The main results are that efficient schemes involve preaudit payments which are increasing in the agent's wealth, audit probabilities are decreasing in the agent's wealth and also satisfy certain constraints as equalities. In general, such schemes involve stochastic auditing and rebates after an audit. This content is only available as a PDF. © 1987 The Society for Economic Analysis Limited
TI - Samurai Accountant: A Theory of Auditing and Plunder
JO - The Review of Economic Studies
DO - 10.2307/2297481
DA - 1987-10-01
UR - https://www.deepdyve.com/lp/oxford-university-press/samurai-accountant-a-theory-of-auditing-and-plunder-Ru4IacLRUH
SP - 525
EP - 540
VL - 54
IS - 4
DP - DeepDyve
ER -