A Game Theoretic Approach to Disciplining Advisers

Decision makers in large companies and organisations are often constrained in time to become fully informed before making a decision. It is often the case that they rely on advice given by their advisers who do the analysis. However, a problem of reliability may arise when an adviser does not possess the same preferences as the decision maker. This paper studies how a trigger strategy can be used to discipline an adviser into giving advice according to the decision maker‟s preferences. Furthermore, it is also explained when it is profitable for the decision maker to use such a strategy. As an extension to the main conclusions, it is shown that it is possible that decision makers choose to follow an adviser with different preferences rather than an adviser with similar, but not the same, preferences.