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Collusion and Strategic Favoritism in Organizations

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Author Info
Zhijun () (ESRC Centre for Competition Policy, University of East Anglia)
Abstract

Fighting collusion has long been a challenge in organizations, whilst favoritism in organizations has long been attacked as one of the most important sources of workplace conflicts. This paper links the phenomena of collusion and favoritism together which seem to be irrelevant. We show that favoritism cannot benefit organizations where collusion is not a serious concern; meanwhile favoritism is not effective in dealing with well-organized collusion; however, strategic use of favoritism can bring conflicts among collusive subordinates and undermine the efficiency of collusion, therefore it is effective in fighting collusion.

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Publisher Info
Paper provided by Centre for Competition Policy, University of East Anglia in its series Working Papers with number 08-27.

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Length: 22 pages
Date of creation: Aug 2008
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Handle: RePEc:ccp:wpaper:wp08-27

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Related research
Keywords: collusion; favoritism; tournaments;

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  1. Itoh Hideshi, 1993. "Coalitions, Incentives, and Risk Sharing," Journal of Economic Theory, Elsevier, vol. 60(2), pages 410-427, August. [Downloadable!] (restricted)
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  3. Ishiguro, Shingo, 2004. "Collusion and discrimination in organizations," Journal of Economic Theory, Elsevier, vol. 116(2), pages 357-369, June. [Downloadable!] (restricted)
  4. Yeon-Koo Che & Jinwoo Kim, 2005. "Robustly collusion-proof implementation," Discussion Papers 0506-12, Columbia University, Department of Economics. [Downloadable!]
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  5. Green, Jerry R & Stokey, Nancy L, 1983. "A Comparison of Tournaments and Contracts," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 349-64, June. [Downloadable!] (restricted)
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  6. Jean-Jacques Laffont & David Martimort, 1997. "Collusion under Asymmetric Information," Econometrica, Econometric Society, vol. 65(4), pages 875-912, July.
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  7. Prendergast, Canice & Topel, Robert, 1993. "Discretion and bias in performance evaluation," European Economic Review, Elsevier, vol. 37(2-3), pages 355-365, April. [Downloadable!] (restricted)
  8. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March. [Downloadable!] (restricted)
  9. Prendergast, Canice & Topel, Robert H, 1996. "Favoritism in Organizations," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 958-78, October. [Downloadable!] (restricted)
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  10. Kong-Pin Chen, 2003. "Sabotage in Promotion Tournaments," Journal of Law, Economics and Organization, Oxford University Press, vol. 19(1), pages 119-140, April.
  11. Jean-Jacques Laffont & David Martimort, 2000. "Mechanism Design with Collusion and Correlation," Econometrica, Econometric Society, vol. 68(2), pages 309-342, March.
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