A Revelation Mechanism for Soft Information Under Moral Hazard

What's the damage? Environmental regulation with policy‐motivated bureaucrats

“…By contrast, the agent's policy preferences are assumed to be common knowledge and thus they are not a type in this sense. That the state of the world becomes the agent's type can also be the case if the state results from the agent's effort, as in the model ofRoger (2016). In Roger's model, however, the agent does not directly care about the value of that parameter, but only about her own effort and payments, such that an additional mechanism of audit and punishment is used for an optimal contract.4 The assumption that the regulator can refuse the government's offer and implement his preferred policy represents an extreme case.…”