We study a setting in which a mechanism designer must choose the appropriate social alternative depending on the state of nature. We study the problem of optimal design and demonstrate that a mechanism that allocates the social optimum and assigns payments equal to the posterior expected utility...

This paper presents a simple agency model to explain why third-party income reporting by employers dramatically improves income tax enforcement. Modern firms have a large number of employees and carry out complex production tasks, which requires the use of accurate business records. Because such...