Abstract

Is ‘information’ truthful? Do contractors have the incentive to lie and / or disobey? If they do, how can we make them tell the truth and obey? How well does a social institution perform in its communication of information and coordination role? Does it need reform? What may be a feasible and desirable social plan and how can we make the institution implement it without any problems associated with information asymmetry? My objective is to show how agents may eliminate adverse selection and moral hazard through engineering of incentive-compatible constraints.