Collusion and Outcome Equivalency
This paper considers a principal-agent model with adverse selection, in which collusion among the agents is possible. We compare the optimal outcome in two cases: (i) the principal can perfectly discriminate the transfers to the agents, and (ii) the principal's power to discriminate the transfers to the agents is limited. We find that the principal's payoff is not affected by limitation on transfer discrimination.
Volume (Year): 164 (2008)
Issue (Month): 3 (September)
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