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Endogenous Obfuscation in Injury Investigations
Author(s) -
Hartigan James C.
Publication year - 2002
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/1468-0335.00296
Subject(s) - obfuscation , business , government (linguistics) , quality (philosophy) , verdict , law and economics , economics , computer security , computer science , law , philosophy , linguistics , epistemology , political science
Eligibility for public benefits may require an injury investigation. The thoroughness of the investigation is a policy decision of the government. An investigative authority chooses the optimal effort to infer from a noisy signal (business plan) the quality of management and market conditions when a firm petitions for benefits. Under plausible conditions, firms will underperform to raise the probability of an affirmative verdict, and the authority will expend low investigative effort. Good and bad managers will obtain relief under adverse market conditions. This is preferred by good managers, as they do not have to separate by sending a costly signal.