Monitoring a Common Agent: Implications for Financial Contracting

  title={Monitoring a Common Agent: Implications for Financial Contracting},
  author={Fahad Khalil and David Martimort and Bruno Parigi},
  journal={ERN: Internal \& External Contracting \& Transaction Costs (Topic)},
We study the problem of multiple principals who want to obtain income from a privately informed agent and design their contracts non-cooperatively. Our analysis reveals that the degree of coordination between principals has strong implications for the shapes of contracts and the amount of monitoring. Equity-like contracts and excessive monitoring emerge when principals are able to coordinate monitoring or verify each others’ monitoring efforts. When this is not possible, free riding in… Expand
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