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The fog of fraud – Mitigating fraud by strategic ambiguity

Lang, Matthias; Wambach, Achim - In: Games and Economic Behavior 81 (2013) C, pp. 255-275

committing to a fraud-detection strategy eliminates the ambiguity about auditing. Thus, strategic ambiguity can be an equilibrium …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 …

Persistent link: https://www.econbiz.de/10010738053

The value of information in a principal–agent model with moral hazard: The ex post contracting case

Silvers, Randy - In: Games and Economic Behavior 74 (2012) 1, pp. 352-365

In a principal–agent model with moral hazard, a signal about the principalʼs technology — the stochastic mapping from the agentʼs action to the outcome — is observed before the contract is offered. The signal is either uninformative (null information), informative and observed only by...

Persistent link: https://www.econbiz.de/10011049676

Overconfidence and moral hazard

la Rosa, Leonidas Enrique de - In: Games and Economic Behavior 73 (2011) 2, pp. 429-451

In this paper, I study the effects of overconfidence on incentive contracts in a moral-hazard framework. Agent overconfidence can have conflicting effects on the equilibrium contract. On the one hand, an optimistic or overconfident agent disproportionately values success-contingent payments, and...

Persistent link: https://www.econbiz.de/10010573644

Limited liability and mechanism design in procurement

Burguet, Roberto; Ganuza, Juan-José; Hauk, Esther - In: Games and Economic Behavior 76 (2012) 1, pp. 15-25

In the presence of cost uncertainty, limited liability introduces the possibility of default in procurement. If financial soundness is not perfectly observable, then financially weaker contractors are selected with higher probability in any incentive compatible mechanism. Informational rents are...

Persistent link: https://www.econbiz.de/10011049705

Robustness of simple menus of contracts in cost-based procurement

Garrett, Daniel F. - In: Games and Economic Behavior 87 (2014) C, pp. 631-641

We consider a model of cost-based procurement in which the principal faces Knightian uncertainty about the agent's preferences for cost reduction. We show that a particularly simple incentive scheme—a menu comprising a fixed-price contract and a cost-reimbursement contract—minimizes the...

Persistent link: https://www.econbiz.de/10011049864

Bargaining with revoking costs

Dutta, Rohan - In: Games and Economic Behavior 74 (2012) 1, pp. 144-153

A simple two stage bilateral bargaining game is analyzed. The players simultaneously demand shares of a unit size pie. If the demands add up to more than one, the players simultaneously choose whether to stick to their demand or accept the otherʼs offer. While both parties sticking to their...

Persistent link: https://www.econbiz.de/10011049846

Tough negotiations: Bilateral bargaining with durable commitments

Ellingsen, Tore; Miettinen, Topi - In: Games and Economic Behavior 87 (2014) C, pp. 353-366

attrition: Negotiators initially commit to incompatible offers, but agreement occurs once a negotiator's commitment decays. If …

Persistent link: https://www.econbiz.de/10010931181

Optimal value commitment in bilateral bargaining

Britz, Volker - In: Games and Economic Behavior 77 (2013) 1, pp. 345-351

We study the role of commitment as a source of strategic power in a non-cooperative bargaining game. Two impatient … recognition probabilities. Before bargaining, a player can commit to some part of the surplus. This commitment remains binding … something which has become impossible. The model offers insight on the relative importance of proposal power and commitment for …

Persistent link: https://www.econbiz.de/10010603330

A folk theorem for Bayesian games with commitment

Forges, Françoise - In: Games and Economic Behavior 78 (2013) C, pp. 64-71

commitment devices, are also the equilibrium payoffs of a universal, deterministic commitment game. …

Persistent link: https://www.econbiz.de/10010608396

Almost fully revealing cheap talk with imperfectly informed senders

Ambrus, Attila; Lu, Shih En - In: Games and Economic Behavior 88 (2014) C, pp. 174-189

We show that in multi-sender communication games where senders imperfectly observe the state, if the state space is large enough, then there can exist equilibria arbitrarily close to full revelation of the state as the noise in the senders' observations gets small. In the case of replacement...

Persistent link: https://www.econbiz.de/10011117135