Subjective evaluation and information-efficiency in organizations

Subjective performance evaluation is modeled as auditing without commitment. A superior, who has to decide whether an where to audit the work done by a subordinate, takes into account all interim information he has obtained in the meantime. This invites workers to cover up and withhold information in order tomake an audit more difficult and thus divert their superior from making one. Weshow that this strategy usually raises the cost of setting work incentives, so that incentives are softened. However, in some instances the opposite holds. When workers onthejob information is valuable for entrepreneurial decisions, work incentives have to be softened in order improve the internal flow of information. -- Subjektive Leistungsbeurteilung durch einen Vorgesetzten wird modelliert als Qualitätsprüfung ohne Selbstbindung. Ein Vorgesetzter muß sich entscheiden, ob und wo er eine Inspektion des Arbeitsergebnisses vornimmt; dabei wird er alleInterimInformationen ber¨ucksichtigen, die er bis zu diesem Zeitpunkt erhalten hat. Das hat zur Folge, daß die Untergebenen alle Informationen zur¨uckhalten und verwischen, die einen Verdacht erregen und daher eine Inspektion durch den Vorgesetzten erleichtern könnten. Ihr Ziel ist es, die Anreize ihres Vorgesetzten so zu beeinflussen, daß dieser von einer Inspektion ganz absieht. Es zeigt sich, daß diese Strategie meistens das Setzen von Leistungsanreizen erschwert, so daß die innerbetrieblichen Anreize reduziert werden. Allerdings ist auch der umgekehrte Fall denkbar. Wenn die VorOrtInformationen des Arbeiters sehr wertvoll für unternehmerische Entscheidungen sind, dann werden die Leistungsanreize reduziert, um den innerbetrieblichen Informationsfluß zu verbessern.Principalagent relationship,auditing without commitment,internal organization,information transmission,influence activity

Mediation in Situations of Conflict and Limited Commitment

We study the reasons and conditions under which mediation is beneficial when a principal needs information from an agent to implement an action. Assuming a strong form of limited commitment, the principal may employ a mediator who gathers information and makes non-binding proposals. We show that a partial rev-elation of information is more effective through a mediator than through the agent himself. This implies that mediation is strictly helpful if and only if the likelihood of a conflict of interest is positive but not too high. The value of mediation depends non-monotonically on the degree of conflict. Our insights extend to general models of contracting with imperfect commitment

Mobile Phone Termination Charges with Asymmetric Regulation

We model competition between two unregulated mobile phone companies with price-elastic demand and less than full market coverage. We also assume that there is a regulated full-coverage fixed network. In order to induce stronger competition, mobile companies could have an incentive to raise their reciprocal mobile-to-mobile access charges above the marginal costs of termination. Stronger competition leads to an increase of the mobiles' market shares, with the advantage that (genuine) network effects are strengthened. Therefore, 'collusion' may well be in line with social welfare.Telecommunication, Mobile phones, Mobile-to-mobile access charges, Network effects

Mediation in Situations of Conflict

We study the effectiveness of mediators in situations of conflict. In a game of cheap talk a principal may employ a mediator whose task is to gather information and make non--binding proposals. We show that mediators facilitate information transmission and are helpful if and only if the likelihood of a conflict of interest is strictly positive but not too high. Mediation increases the amount of information that can be induced in equilibrium and is helpful when full information revelation is not feasible. The insights of this paper extend to general models of mechanism design with imperfect commitment of the contract designer.

Mediation in Situations of Conflict and Limited Commitment

We study the reasons and conditions under which mediation is beneficial when a principal needs information from an agent to implement an action. Assuming a strong form of limited commitment, the principal may employ a mediator who gathers information and makes non-binding proposals. We show that a partial rev-elation of information is more effective through a mediator than through the agent himself. This implies that mediation is strictly helpful if and only if the likelihood of a conflict of interest is positive but not too high. The value of mediation depends non-monotonically on the degree of conflict. Our insights extend to general models of contracting with imperfect commitment.Contracting; Non-Commitment; Revelation Principle

Mediation in Situations of Conflict and Limited Commitment

We study the reasons and conditions under which mediation is beneficial when a principal needs information from an agent to implement an action. Assuming a strong form of limited commitment, the principal may employ a mediator who gathers information and makes non--binding proposals. We show that a partial revelation of information is more effective through a mediator than through the agent himself. This implies that mediation is strictly helpful if and only if the likelihood of a conflict of interest is positive but not too high. The value of mediation depends non--monotonically on the degree of conflict. Our insights extend to general models of contracting with imperfect commitment.Mediation, Negotiation, Limited Commitment, Revelation Principle

Subjective evaluation and information-efficiency in organizations

Subjective performance evaluation is modeled as auditing without commitment. A superior, who has to decide whether an where to audit the work done by a subordinate, takes into account all interim information he has obtained in the meantime. This invites workers to cover up and withhold information in order tomake an audit more difficult and thus divert their superior from making one. Weshow that this strategy usually raises the cost of setting work incentives, so that incentives are softened. However, in some instances the opposite holds. When worker's on-the-job information is valuable for entrepreneurial decisions, work incentives have to be softened in order improve the internal flow of information.Subjektive Leistungsbeurteilung durch einen Vorgesetzten wird modelliert als "Qualitätsprüfung ohne Selbstbindung". Ein Vorgesetzter muß sich entscheiden, ob und wo er eine Inspektion des Arbeitsergebnisses vornimmt; dabei wird er alle Interim-Informationen ber¨ucksichtigen, die er bis zu diesem Zeitpunkt erhalten hat. Das hat zur Folge, daß die Untergebenen alle Informationen zur¨uckhalten und verwischen, die einen Verdacht erregen und daher eine Inspektion durch den Vorgesetzten erleichtern könnten. Ihr Ziel ist es, die Anreize ihres Vorgesetzten so zu beeinflussen, daß dieser von einer Inspektion ganz absieht. Es zeigt sich, daß diese Strategie meistens das Setzen von Leistungsanreizen erschwert, so daß die innerbetrieblichen Anreize reduziert werden. Allerdings ist auch der umgekehrte Fall denkbar. Wenn die Vor-Ort-Informationen des Arbeiters sehr wertvoll für unternehmerische Entscheidungen sind, dann werden die Leistungsanreize reduziert, um den innerbetrieblichen Informationsfluß zu verbessern

Cooperation and competition in the cargo liner shipping industry

It is widespread international practice that cargo liners meet at regular conferences to fix prices and quotas for individual routes. Presently, however, the respective European regulation granting liners an exemption from competition laws is under review. Liners claim that conferences are a necessary pre-condition for the provision of reliable services. In contrast, we demonstrate that there is little evidence for a destabilizing effect of competition, while conferences can themselves give rise to instability. The liners association (ELAA) has, in response to the EU review process, proposed an information exchange system as an alternative. In our view this has some merits. Transfer of data might even be mandatory, information output should be aggregated and anonymized and made available to the general public. We are skeptical, however, about any discussions between liners that go further than anonymized information exchange. -- In der Containerseeschifffahrt ist es weltweit üblich, dass sich die Reeder in Konferenzen über Frachtraten und -quoten für spezifische Handelsrouten abstimmen. In Europa wird jedoch die Regulierung, die diese Ausnahme vom Wettbewerbsrecht erlaubt, von der EU-Kommission zur Zeit überprüft. Die Reeder argumentieren, dass Konferenzen nötig sind, um ein stabiles Angebot sicherzustellen. Wir kommen jedoch zu dem Schluss, dass es keine Anhaltspunkte für außerodentlich destabilisierende Effekte von Konkurrenz gibt. Im Gegenteil zeigt sich, dass eher die Konferenzen destabilisierende Effekte erzeugen können. Die Assoziation der Reedereien (ELAA) hat, unter dem Druck der Überprüfung durch die EU, als Alternative die Einrichtung eines Informationsaustauschsystems vorgeschlagen. Dies hat aus unserer Sicht einige Vorteile. Man könnte die Übermittlung von Daten sogar zur Pflicht machen; der daraus gewonnene Informations-Output sollte aggregiert und anonymisiert sein und der allgemeinen Öffentlichkeit zur Verfügung gestellt werden. Wir sind jedoch skeptisch gegenüber Diskussionen zwischen den Reedern, die über den anonymisierten Informationsaustausch hinausgehen.

Mobile Phone Termination Charges with Asymmetric Regulation

We model competition between two unregulated mobile phone companies with price-elastic demand and less than full market coverage. We also assume that there is a regulated full-coverage fixed network. In order to induce stronger competition, mobile companies could have an incentive to raise their reciprocal mobile{to{mobile access charges above the marginal costs of termination. Stronger competition leads to an increase of the mobiles' market shares, with the advantage that (genuine) network effects are strengthened. Therefore, `collusion' may well be in line with social welfare