Two Types of Collusion in a Model of Hierarchical Agency

Authors: Bac, Mehmet; Kucuksenel, Serkan

Source: Journal of Institutional and Theoretical Economics JITE, Volume 162, Number 2, June 2006 , pp. 262-276(15)

Buy & download fulltext article:

Price: $33.00 plus tax (Refund Policy)

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.

Document Type: Research article

DOI: http://dx.doi.org/10.1628/093245606777583585

Publication date: 2006-06-01

More about this publication?

Founded as Zeitschrift f�r die gesamte Staatswissenschaft in 1844.

As one of the oldest journals in the field of political economy, the Journal of Institutional and Theoretical Economics (JITE) deals traditionally with the problems of economics, social policy, and their legal framework. JITE is listed in the Journal of Economic Literature, the Social Science Citation Index, the International Bibliography of the Social Sciences, and COREJ.
Editorial Board
Information for Authors
Subscribe to this Title
Information for Advertisers
Terms & Conditions
Beitrage zur Finanzwissenschaft
Neue okonomische Grundrisse
Conferences on New Political Economy
ingentaconnect is not responsible for the content or availability of external websites