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A Theory of Abuse of Authority in Hierarchies

  • Kouroche Vafaï
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    This paper analyzes abuse of authority in a principal-supervisor-agent hierarchy under moral hazard. We characterize the optimal contracts when the supervisor takes advantage of his authority by blackmailing the agent. We show that the optimal policy for the principal is to deter abuse of authority. We find that, paradoxically, the existence of abuse of authority in hierarchies benefits in fine the victim (the agent) and not the instigator (the supervisor). Our analysis also reveals that the existence of abuse of authority in organizations expands the range of contractual incompleteness. Cet article étudie l'abus d'autorité dans une hiérarchie principal-superviseur-agent avec risque moral. Dans une telle structure, le superviseur dont le rôle consiste à faire un rapport sur le niveau d'effort de l'agent, peut abuser de son autorité en exerçant un chantage sur son subordonné. Lorsque le superviseur observe que l'agent a fourni le niveau d'effort désiré par le principal, il peut menacer l'agent d'un faux rapport dans lequel il signale n'avoir rien observé. Afin d'empêcher une telle menace, l'agent peut avoir intérêt à accepter le chantage du superviseur en lui versant un tribut. On étudie les contrats optimaux dans une telle structure hiérarchique. On montre qu'il est optimal pour le principal d'offrir des contrats qui empêchent l'abus d'autorité. Ces contrats détruisent l'enjeu du chantage en augmentant l'espérance de gain de l'agent. Ce résultat est surprenant car, paradoxalement, la possibilité d'abus d'autorité dans l'organisation profite finalement à la victime (l'agent) et non à l'instigateur (le superviseur).

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    File URL: http://www.cirano.qc.ca/files/publications/99s-07.pdf
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    Paper provided by CIRANO in its series CIRANO Working Papers with number 99s-07.

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    Length: 31 pages
    Date of creation: 01 Feb 1999
    Date of revision:
    Handle: RePEc:cir:cirwor:99s-07
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