Incentive-compatible revelation mechanisms attempt to
A)induce an employee to reject the next best alternative employment opportunity
B)elicit privately-held information
C)secure enforcement primarily by third parties
D)reject voluntary contracting with third parties
E)impose similar risk premiums on all employees

Question

Quizplus · Accepted Answer

Incentive-compatible revelation mechanisms are designed to encourage individuals to reveal private information they possess. This is typically achieved by offering a reward that is contingent on the veracity of the information provided. The mechanism is considered incentive-compatible because it aligns the interests of the individual with those of the party seeking the information. By offering a reward, the individual is incentivized to reveal the truth, since they stand to benefit if they are honest. This approach is frequently used in auctions, but can also be applied in other contexts where private information plays a role in decision-making.

Incentive-Compatible Revelation Mechanisms Attempt to