A Taxation Principle with Non-Contractible Events

In some settings it is not possible to contract with an agent ex ante. For example, a judicial procedure starts only after a crime was committed and only if the criminal is apprehended. We study a principal-agent model with private information and moral hazard in which the intervention of the principal is only triggered by certain outcomes. We introduce a property of social choice functions, identifiability and show that implementable social choice functions satisfying this property can be implemented by a “tariff,” i.e., transfers that depend only on the realized outcome, not on the type of the agent.