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SCREENING ETHICS WHEN HONEST AGENTS CARE ABOUT FAIRNESS*
Author(s) -
Alger Ingela,
Renault Régis
Publication year - 2006
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2006.00372.x
Subject(s) - honesty , lying , private information retrieval , principal (computer security) , incentive , information asymmetry , microeconomics , cheating , economics , law and economics , business , social psychology , psychology , computer science , computer security , medicine , radiology
A principal faces an agent with private information who is either honest or dishonest. Honesty involves revealing private information truthfully if the probability that the equilibrium allocation chosen by an agent who lies is small enough. Even the slightest intolerance for lying prevents full ethics screening whereby the agent is given proper incentives if dishonest and zero rent if honest. Still, some partial ethics screening may allow for taking advantage of the potential honesty of the agent, even if honesty is unlikely. If intolerance for lying is strong, the standard approach that assumes a fully opportunistic agent is robust.