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"Leaks, Sabotage, and Information Design" by Dr. Erik Madsen

Event information
Economics
Seminar
Monday, 18 March 2019
Room 910, K.K. Leung Building, HKU
  • 16:30 - 18:00

Speaker:

Dr. Erik Madsen
Assistant Professor
Department of Economics
New York University

     

    Abstract:

    We study optimal dynamic information disclosure by a principal to an agent of uncertain loyalty who may engage in hidden undermining, for instance through damaging leaks or sabotage. The agent requires information to correctly perform a task but may also covertly commit destructive acts which are only stochastically detectable. The principal optimally provides inconclusive incremental guidance until a deterministic time when the agent is deemed trusted and given a conclusive final report. Disloyal agents are never given incentives to feign loyalty, and in the unique time-consistent implementation undermine with variable, non-monotonic intensity over the lifetime of employment.