Efforts to control bank risk address the wrong problem in the wrong way. They presume that the financial crisis was caused by CEOs who failed to supervise risk-taking employees. The responses focus on executive pay, believing that executives will bring non-executives into line - using incentives...

We study the conflict mediation problem when the mediator must gather information from the disputants. In this case, the same incentives that disputants have to lie to their opponents also exist when talking to the mediator. Addressing this issue in the context of a very general model of...