American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Monitor Reputation and Transparency
American Economic Journal: Microeconomics
vol. 15,
no. 4, November 2023
(pp. 1–67)
Abstract
We study the disclosure policy of a regulator overseeing a monitor with reputation concerns. The monitor faces a manager, who chooses how much to manipulate based on the monitor's reputation. Reputational incentives are strongest for intermediate reputations. Instead of providing transparency, the regulator's disclosure policy aims to keep the monitor's reputation intermediate, even at the cost of diminished incentives. Beneficial schemes feature random delay or noisy information. Schemes that feature verifiable disclosure destroy reputational incentives. The regulator discloses more aggressively when she has better enforcement tools.Citation
Marinovic, Iván, and Martin Szydlowski. 2023. "Monitor Reputation and Transparency." American Economic Journal: Microeconomics, 15 (4): 1–67. DOI: 10.1257/mic.20220006Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G28 Financial Institutions and Services: Government Policy and Regulation
- G38 Corporate Finance and Governance: Government Policy and Regulation
- M42 Auditing
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