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Two types of collusion in a model of hierarchical agency

Bac, Mehemet and Kucuksenel, Serkan (2006) Two types of collusion in a model of hierarchical agency. Journal of Institutional and Theoretical Economics, 162 (2). pp. 262-276. ISSN 0932-4569. https://resolver.caltech.edu/CaltechAUTHORS:20110216-091307119

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Abstract

The standard ex post type of collusion is a supervisor-agent agreement to misrepresent the outcome of supervision. Under ex ante collusion the agent makes a side transfer to the supervisor, who, in return, stops monitoring the agent's productivity. Extending Tirole's [1986] model of hierarchy to include ex ante collusion and supervision costs, we show that the principal can ignore ex ante collusion and the supervisor's incentive constraint if supervision technology is likely to generate information at a low cost. To prevent ex ante collusion the principal increases the difference between the wages paid when the supervisor's report is empty and when it contains productivity evidence.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.1628/093245606777583585DOIUNSPECIFIED
http://www.ingentaconnect.com/content/mohr/jite/2006/00000162/00000002/art00003PublisherUNSPECIFIED
Additional Information:©2006 Mohr Siebeck. Publication date: 2006-06-01. We are grateful of two referees for extensive comments that substantially improved the paper. Remaining errors are our own.
Subject Keywords:Hierarchy, incentives, collusion.
Issue or Number:2
Classification Code:JEL Classification Numbers: D82, L22
Record Number:CaltechAUTHORS:20110216-091307119
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20110216-091307119
Official Citation:Two types of collusion in a model of hierarchical agency JITE. Journal of institutional and theoretical economics [0932-4569] Kucuksenel yr:2006 vol:162 iss:2 pg:262 -276
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:22237
Collection:CaltechAUTHORS
Deposited By: Ruth Sustaita
Deposited On:16 Feb 2011 18:04
Last Modified:03 Oct 2019 02:36

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