Should principals explain and justify their evaluations? In this paper the principal's evaluation is private information, but she can provide justification by sending a costly cheap-talk message. I show that the principal explains her evaluation to the agent if the evaluation turns out to be...

Most insurance companies publish few data on the occurrence and detection of insurance fraud. This stands in contrast to the previous literature on costly state verification, which has shown that it is optimal to commit to an auditing strategy. The credible announcement of thoroughly auditing...

We consider a two-player contest model in which breakthroughs arrive according to privately observed Poisson processes. Each player’s process continues as long as she exerts costly effort. The player who collects the most breakthroughs until a predetermined deadline wins a prize.