Dynamic Disclosure and Incentives in Expert Services
Oct 2, 2026
We study dynamic mechanism design in expert relationships, such as those arising in healthcare, legal services, consulting, and asset management. An expert privately observes progress in resolving a client's problem. The client pays a fixed price per unit of time for each intervention, and the expert bears the associated cost, so high- and low-intensity services generate different flow profits. High intensity yields the higher flow profit, whereas low intensity can generate greater total profit by slowing resolution and prolonging the engagement. High intensity is efficient during crisis, while low intensity is efficient after containment. The expert may therefore conceal containment to preserve high-intensity work or falsely claim containment to obtain a slower, longer engagement. Under intensity rent seeking, the optimal mechanism ignores reporting and conditions interventions on elapsed time only. Under duration rent seeking, the mechanism rewards a report with low intensity but later returns to high intensity if resolution does not occur, placing the screening distortion at dates a false reporter would be relatively more likely to reach without resolution. Under- and over-intervention can therefore arise on the equilibrium path as tools for eliciting information, even though interventions are observable and the expert reports truthfully.