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- Title
Screening Ethics when Honest Agents Keep their Word.
- Authors
Alger, Ingela; Renault, Régis
- Abstract
Using a principal-agent setting, we introduce honesty that requires pre-commitment. The principal offers a menu of mechanisms to screen ethics. Agents may misrepresent ethics. Dishonest agents may misrepresent the match with the assigned task (good or bad), while honest agents reveal the match honestly if they have pre-committed. Ethics-screening, that allows for match-screening with dishonest agents while leaving a lower rent to honest agents, is optimal if both honesty and a good match are likely. Otherwise the optimal mechanism is the standard second-best or the first-best (where dishonest agents misrepresent the match), if dishonesty is likely or unlikely respectively.
- Subjects
HONESTY; TRUTHFULNESS &; falsehood; RELIABILITY (Personality trait); ETHICS; LOYALTY; MORAL hazard; TRUTH; INTEGRITY; COMMITMENT (Psychology)
- Publication
Economic Theory, 2007, Vol 30, Issue 2, p291
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-005-0057-3