Explicit and Implicit Incentives for Multiple Agents

by Jonathan Glover

Explicit and Implicit Incentives for Multiple Agents presents research on three themes related to multiagent incentives, taking the view that developing a better understanding of multiagent incentives is central to developing a better understanding of observed institutions. First, in preventing tacit collusion, confession is an alternative to ratting that allows for less demanding behavioral assumptions than Bayes-Nash, while approximately implementing the second-best (Bayes-Nash) solution. Second, optimal robust contracts designed to deal with a variety of settings are qualitatively similar to the standard optimal contracts when the variety is small and qualitatively different than the standard ones when the variety is large. When the variety is large, individual rather than relative performance evaluation is optimal in moral hazard settings, and procurement contracts similar to observed second-price procurement auctions emerge as optimal in adverse selection. Such contracts are not subject to the tacit collusion problem by virtue of providing dominant strategy incentives. Third, in repeated settings, collusion can be turned into cooperation (implicit contracting between the agents that benefits the principal) by using aggregate performance measures to motivate the agents to mutually monitor each other. The monograph surveys existing research on these three themes and presents new results. The focus of the monograph is on managerial accounting applications. The conclusion presents preliminary applications of the ideas to financial reporting regulation.

84 pages, Paperback

First published December 7, 2012

About the author

Jonathan Glover (born 1941) is a British philosopher known for his studies on bioethics. He was educated in Tonbridge School, later going on to Corpus Christi College, Oxford. He was a fellow and tutor in philosophy at New College, Oxford. He currently teaches ethics at King's College London. Glover is a fellow of the Hastings Center, an independent bioethics research institution in the United States.

In Humanity: A Moral History of the Twentieth Century, published in 1999, Glover makes the case for Applied Ethics. He examines the various types of atrocity that were perpetrated in the 20th century and considers what sort of bulwarks there could be against them. He allows that religion has provided bulwarks, which are getting eroded. He identifies three types of bulwark. The two more dependable are sympathy and respect for human dignity. The less dependable third is Moral Identity: "I belong to a kind of person who would not do that sort of thing". This third is less dependable because notions of moral identity can themselves be warped, as was done by the Nazis.

In 1977 he argued that to call a fetus a human person was to stretch the term beyond its natural boundaries.

In The End of Faith, Sam Harris quotes Glover as saying: "Our entanglements with people close to us erode simple self-interest. Husbands, wives, lovers, parents, children and friends all blur the boundaries of selfish concern. Francis Bacon rightly said that people with children have given hostages to fortune. Inescapably, other forms of friendship and love hold us hostage too...Narrow self-interest is destabilized."

In 1989 the European Commission hired Glover to head a panel on embryo research in Europe.

He is married to Vivette Glover a prominent neuroscientist.