Third-party audit provides incentives to an agent whose actions affect the value of an asset. When audit intensity and outcome are unverifiable, we show that with interim-participation constraints the optimal mechanism may use only the auditor's report, disregarding the agent's information. Furthermore, the auditor obtains the asset and the agent a monetary compensation, when a high asset value is reported. This suggests regulating renewable resources or utility networks by giving entrants the option to buy the right to use the asset at a predetermined price, and financially rewarding incumbents for good performance.

Iossa, E., Legros, P. (2004). Auditing and property rights. RAND JOURNAL OF ECONOMICS, 35, 356-372.

Auditing and property rights

IOSSA, ELISABETTA;
2004-01-01

Abstract

Third-party audit provides incentives to an agent whose actions affect the value of an asset. When audit intensity and outcome are unverifiable, we show that with interim-participation constraints the optimal mechanism may use only the auditor's report, disregarding the agent's information. Furthermore, the auditor obtains the asset and the agent a monetary compensation, when a high asset value is reported. This suggests regulating renewable resources or utility networks by giving entrants the option to buy the right to use the asset at a predetermined price, and financially rewarding incumbents for good performance.
2004
Pubblicato
Rilevanza internazionale
Articolo
Sì, ma tipo non specificato
Settore SECS-P/01 - ECONOMIA POLITICA
English
Con Impact Factor ISI
auditing; information acquisition; interim participation constraints; property rights and soft information
Iossa, E., Legros, P. (2004). Auditing and property rights. RAND JOURNAL OF ECONOMICS, 35, 356-372.
Iossa, E; Legros, P
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2108/8895
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