Discussion paper

DP16768 Organizing Data Analytics

We develop a theory of credible skepticism in organizations to explain the main trade-offs in organizing data generation, analysis and reporting. In our designer-agent-principal game, the designer selects the information privately observed by the agent who can misreport it at a cost, while the principal can audit the report. We study three organizational levers: tampering prevention, tampering detection and the allocation of the experimental-design task. We show that motivating informative experimentation while discouraging misreporting are often conflicting organizational goals. To incentivize experimentation, the principal foregoes a flawless tampering detection/prevention system and separates the tasks of experimental design and implementation.

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Citation

Alonso, R and O Câmara (eds) (2021), “DP16768 Organizing Data Analytics”, CEPR Press Discussion Paper No. 16768. https://cepr.org/publications/dp16768