Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93754
Authors: 
Mitusch, Kay
Strausz, Roland
Year of Publication: 
2004
Series/Report no.: 
SFB/TR 15 Discussion Paper 24
Abstract: 
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.
Subjects: 
Contracting
Non-Commitment
Revelation Principle
JEL: 
D82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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