None of your business! Optimal disclosure policies with multiple audiences

Abstract

While disclosing personal information makes individuals accountable for their actions, many laws restrict access to such information. This paper studies the efficient disclosure of information in principal-agent relationships with moral hazard and multiple audiences. The agent's talents are task-specific but correlated with each other and therefore information has heterogeneous value across audiences. The Principal exploits the agent's career concerns by strategically disclosing differentiated information to each audience to incentivize effort. The novelty is to analyze the link between the disclosure policy, talent's correlation, and the match values. An efficient disclosure policy combines a uniform cut-off below which matches are prevented - as much as possible - to boost incentives and above which differentiated recommendations are sent to allow the most efficient matches to take place. The results shed light on several existing laws such as those protecting employees' personal information or design and access to criminal records and blacklists."