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STICERD Economic Theory Seminars

Should the Timing of Inspections be Predictable?

Ian Ball (Massachusetts Institute of Technology)

Thursday 02 March 2023 15:30 - 17:00

Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events. Please check our website listings and Twitter feed @STICERD_LSE for updates.

Unless otherwise specified, in-person seminars are open to the public.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.

About this event

A principal hires an agent to work on a long-term project that culminates in either a breakthrough or a breakdown. Arrival rates of breakthroughs and breakdowns are governed by the agent's hidden actions: working increases the arrival rate of breakthroughs; shirking increases the arrival rate of breakdowns. To motivate the agent to work, the principal conducts costly inspections, and she fires the agent if shirking is detected. We characterize the principal's optimal inspection policy. When work primarily speeds up breakthroughs, the optimal inspection policy is periodic. When work primarily delays breakdowns, optimal inspections are random.

Economic Theory Seminars are held on Thursdays in term time at 15:30-17:00, both ONLINE and IN PERSON in SAL 3.05.

Seminar organisers: Dr Andrew Ellis and Dr Christopher Sandmann.

For further information please contact Sadia Ali:

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