Conditional Monitoring Policy Under Moral Hazard

This paper extends the previous research on conditional monitoring by allowing the principal to choose the level of monitoring investment and by finding the properties of an interior optimal monitoring policy which is not of a bang-bang nature. We show that, under a concave monitoring technology, the optimal monitoring investment is decreasing in the observed outcome and lower-tailed in a variety of contexts.

• 저널Management Science · 38(8) · 1106–1120
• 토픽Auction Theory and Applications · Management Science and Operations Research
• DOI10.1287/mnsc.38.8.1106
• 저자Son Ku Kim, Yoon S. Suh