TY - JOUR
T1 - Consulting collusive experts
AU - Mookherjee, Dilip
AU - Motta, Alberto
AU - Tsumagari, Masatoshi
N1 - Funding Information:
For helpful comments and discussions we thank three referees and the Advisory Editor of this journal, Jacopo Bizotto, Yeon-Koo Che, Christian Hellwig, Bart Lipman, Juan Ortner, Yutaka Suzuki and seminar participants at Universities of Cambridge, New South Wales, Washington, Kellogg School of Management, Sloan School of Management, the Theory Workshop at Boston University and the June 2014 Ravello Workshop. Tsumagari acknowledges funding from Keio Gijuku Academic Development Funds .
Funding Information:
For helpful comments and discussions we thank three referees and the Advisory Editor of this journal, Jacopo Bizotto, Yeon-Koo Che, Christian Hellwig, Bart Lipman, Juan Ortner, Yutaka Suzuki and seminar participants at Universities of Cambridge, New South Wales, Washington, Kellogg School of Management, Sloan School of Management, the Theory Workshop at Boston University and the June 2014 Ravello Workshop. Tsumagari acknowledges funding from Keio Gijuku Academic Development Funds.
Publisher Copyright:
© 2020 Elsevier Inc.
PY - 2020/7
Y1 - 2020/7
N2 - In designing a contract with an agent privately informed about its cost, should a principal consult an expert who has already received a partially informative signal of the agent's cost? The expert has a prior relationship with the agent, facilitating (weak) ex ante collusion which coordinates their participation and reporting decisions with accompanying side-payments. While delegating contracting with the agent to the expert is never profitable, we show that consulting the expert is typically valuable. Changes in bargaining power within the coalition have no effect, while altruism of the expert towards the agent makes the principal worse off.
AB - In designing a contract with an agent privately informed about its cost, should a principal consult an expert who has already received a partially informative signal of the agent's cost? The expert has a prior relationship with the agent, facilitating (weak) ex ante collusion which coordinates their participation and reporting decisions with accompanying side-payments. While delegating contracting with the agent to the expert is never profitable, we show that consulting the expert is typically valuable. Changes in bargaining power within the coalition have no effect, while altruism of the expert towards the agent makes the principal worse off.
KW - Collusion
KW - Delegation
KW - Expert
KW - Mechanism design
UR - http://www.scopus.com/inward/record.url?scp=85084758028&partnerID=8YFLogxK
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U2 - 10.1016/j.geb.2020.04.011
DO - 10.1016/j.geb.2020.04.011
M3 - Article
AN - SCOPUS:85084758028
SN - 0899-8256
VL - 122
SP - 290
EP - 317
JO - Games and Economic Behavior
JF - Games and Economic Behavior
ER -