We study a model of double moral hazard in which an information system is used in a decision problem (the principal can choose her own act based on the information) and a control problem (the principal can use the information to motivate the agent). An information system that provides more...

This teaching note illustrates how reporting historical data, even when it is unverifiable, can be useful in improving productive efficiency. Historical cost accounting is evaluated in a simple multi-person setting with private information. Because the source of contracting frictions is limited...

In this paper we examine a simple but suggestive setting in which the income number arises naturally (and directly) from competitive markets. While no explicit assumptions are made about individual firm's objectives, it turns out that equilibrium is consistent with the maximization of a number...

This note studies a moral hazard model of joint production in which there are strong gains to coordination. The mechanism we propose for resolving the tacit collusion problem that arises in our setting is simple. A key aspect of the mechanism is the use of at- will contracts which provide the...

In this paper, we resolve the auditor independence problem that arises in the model studied in Antle (1982, 1984). We argue that the owner-manager-auditor relationship exhibits a "separability" that facilitates the use of a particularly simple mechanism that prevents collusion. The mechanism...

This paper adopts a valuation perspective within an asymmetric information setting and explores properties of economic income. The optimal intertemporal contract induces an accrual component of income which would not exist absent the information problem. The contracting solution introduces a...