I report the results of an experiment designed to investigate the influence of noncredible communications and group affiliation on the formation of self-serving bias in an auditing trust game. I find that manager-subjects use noncredible communications (i.e., a message communicating their intent...

Incentives affect the manner in which auditors conduct their audits and one important research question is how different types of incentives affect behavior. The objectives of this paper are to examine how auditors' intrinsic motivation could be augmented by their participation in developing the...

This study sets a bank-run equilibrium analysis in a dynamic and incomplete information environment where agents can reconsider attempts to run on the bank over time. The typical static bank-run model is extended in this paper to capture the learning dynamics of agents through time, giving...

This paper provides evidence that tournaments motivate analysts to behave boldly and that tournament incentives can be perverse. Controlling for forecast accuracy, analysts making bold forecasts are more likely to win the tournaments measured by moving to prestigious brokerages or being named as...

We examine the implementation of efficient decisions about accepting a special order with asymmetric information by means of a dual transfer pricing mechanism based on Ronen and McKinney (1970). The model is designed in a simple fashion, two vertically related divisions within a firm...

This paper addresses the question, what metrics should be used for performance evaluation and in particular how they should be weighted and combined in the presence of technological interdependencies when the agents exhibit variedly strong developed rivalry. We find that the principal reacts to...

Incentives often distort behavior: they induce agents to exert effort but this effort is not employed optimally. This paper proposes a theory of incentive design allowing for such distorted behavior. At the heart of the theory is a trade-off between getting the agent to exert effort and ensuring...

Information disclosure is important for the economic well-being of society. Furthermore, given various issues, such as disclosure related to corporate social responsibility and scientific communication between scientists and society, the state of information disclosure is closely related to...

The aim of auditing is to protect active and potential investors from accounting fraud. However, the large number of auditing scandals demonstrates that auditing has a dark side. This dark side of auditing is the topic of this paper. Correct auditing is a public good, provided by private...

We consider a dynamic model featuring two firms that test a regulator’s enforcement propensity through their misconduct and a regulator that disciplines them to build a reputation for strict enforcement. We show that when the regulator has full discretion over the enforcement criterion, peer...