arXiv
Open Access
2020
Optimal Rating Design under Moral Hazard
Maryam Saeedi
Ali Shourideh
Abstrak
We study optimal rating design under moral hazard and strategic manipulation. An intermediary observes a noisy indicator of effort and commits to a rating policy that shapes market beliefs and pay. We characterize optimal ratings via concavification of a gain function. Optimal ratings depends on interaction of effort and risk: for activities that raise tail risk, optimal ratings exhibit lower censorship, pooling poor outcomes to insure and encourage risk-taking; for activities that reduce tail risk, upper censorship increases penalties for negligence. In multi-task environments with window dressing, less informative ratings deter manipulation. In redistributive test design, optimal tests exhibit mid-censorship.
Topik & Kata Kunci
Penulis (2)
M
Maryam Saeedi
A
Ali Shourideh
Akses Cepat
Informasi Jurnal
- Tahun Terbit
- 2020
- Bahasa
- en
- Sumber Database
- arXiv
- Akses
- Open Access ✓