Lying to Speak the Truth: Selective Manipulation and Improved Information Transmission

A-Tier
Journal: Journal of Finance
Year: 2024
Volume: 79
Issue: 6
Pages: 4303-4352

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We analyze a principal‐agent model in which an effort‐averse agent can manipulate a publicly observable performance report. The principal cannot observe the agent's cost of effort, her effort choice, and whether she manipulated the report. An optimal contract links compensation to the realized output and the (possibly manipulated) report. Manipulation can be beneficial to the principal because it can make the report more informative about the agent's effort choice, thereby reducing the agent's information rent. This is achieved through a contract that incentivizes the agent to selectively engage in manipulation based on her effort choice.

Technical Details

RePEc Handle
repec:bla:jfinan:v:79:y:2024:i:6:p:4303-4352
Journal Field
Finance
Author Count
2
Added to Database
2026-01-29