Published June 2006
| Submitted
Journal Article
Open
Two types of collusion in a model of hierarchical agency
- Creators
- Bac, Mehemet
- Kucuksenel, Serkan
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.
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.Attached Files
Submitted - BACjite06preprint.pdf
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BACjite06preprint.pdf
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Additional details
- Eprint ID
- 22237
- Resolver ID
- CaltechAUTHORS:20110216-091307119
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2011-02-16Created from EPrint's datestamp field
- Updated
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2021-11-09Created from EPrint's last_modified field