Information suppression in multi-agent contracting

Information suppression in multi-agent contracting This paper examines the principal’s preferences over reporting systems in multi-agent settings. In multi-agent settings, the principal’s contract offer depends on the credibility of the agents’ commitment not to collude on the terms of the contract. If the agents can credibly rule out collusion, then the principal prefers that the agents observe all performance measures and she prefers an accounting system that releases detailed instead of aggregated information. To the contrary, when the principal cannot preclude the agents from writing side contracts, it can be efficient to suppress certain information signals for contracting purposes. Specifically, restricting the information dissemination within organizations or releasing aggregated instead of detailed information are two efficient avenues to suppress information. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

Information suppression in multi-agent contracting

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Publisher
Springer US
Copyright
Copyright © 2011 by Springer Science+Business Media, LLC
Subject
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
ISSN
1380-6653
eISSN
1573-7136
D.O.I.
10.1007/s11142-011-9175-2
Publisher site
See Article on Publisher Site

Abstract

This paper examines the principal’s preferences over reporting systems in multi-agent settings. In multi-agent settings, the principal’s contract offer depends on the credibility of the agents’ commitment not to collude on the terms of the contract. If the agents can credibly rule out collusion, then the principal prefers that the agents observe all performance measures and she prefers an accounting system that releases detailed instead of aggregated information. To the contrary, when the principal cannot preclude the agents from writing side contracts, it can be efficient to suppress certain information signals for contracting purposes. Specifically, restricting the information dissemination within organizations or releasing aggregated instead of detailed information are two efficient avenues to suppress information.

Journal

Review of Accounting StudiesSpringer Journals

Published: Nov 30, 2011

References

  • Hierarchical reporting, aggregation, and information cascades
    Arya, A; Glover, J; Mittendorf, B
  • Monitoring in multiagent organizations
    Baldenius, T; Melumad, ND; Ziv, A

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