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When (not) to publicize inspection results

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  • Solan, Eilon
  • Zhao, Chang

Abstract

We consider a dynamic inspection problem between a principal and several agents. The principal observes the full inspection history, whereas each agent only observes inspections imposed on himself. When inspection resources are limited, the inspection intensities for agents are negatively correlated, and hence each agent cares not only about his own inspection history, but also about the inspection histories of the other agents. In such cases, should the principal publicly reveal past inspection history, or should she conceal this information? We show that the principal benefits from concealing inspection history. Nevertheless, this benefit becomes less significant as the number of agents increases, and disappears in the limit case with a continuum of agents.

Suggested Citation

  • Solan, Eilon & Zhao, Chang, 2023. "When (not) to publicize inspection results," Journal of Economic Theory, Elsevier, vol. 210(C).
    • Handle: RePEc:eee:jetheo:v:210:y:2023:i:c:s0022053123000637
    DOI: 10.1016/j.jet.2023.105667
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    More about this item

    Keywords

    Dynamic inspection; Imperfect monitoring; Optimal information revelation;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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