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On Transparency in Organizations

Jehiel, P; (2015) On Transparency in Organizations. The Review of Economic Studies , 82 (2) pp. 736-761. 10.1093/restud/rdu040. Green open access

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Abstract

When is it best for the Principal to commit to not disclosing all that he/she knows in moral hazard interactions? I show that whenever the Agent would choose the same action under complete information at several distinct states, then full transparency can generically be improved upon. This implies that full transparency is generically suboptimal whenever the dimension of the information held by the Principal exceeds the dimension of the Agent's action. In a simple class of problems, I make further progress on the best disclosure policy assuming the Principal can either disclose fully the state or remain silent.

Type: Article
Title: On Transparency in Organizations
Open access status: An open access version is available from UCL Discovery
DOI: 10.1093/restud/rdu040
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Social Sciences, Economics, Business & Economics, Transparency, Information Disclosure, Dimensionality, OPTIMAL INFORMATION DISCLOSURE, MORAL HAZARD, AUCTIONS
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10066731
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