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Two Types of Collusion in a Model of Hierarchical Agency

Author

Listed:
  • Mehmet Bac

    (Sabancý University)

  • Serkan Kucuksenel

    (California Institute of Technology)

Abstract

We introduce ex-ante collusion whereby the supervisor stops monitoring for a transfer payment from the agent, in addition to ex-post collusion following the monitoring outcome. Extending a well-known model of hierarchy, we study the determinants of ex-ante collusion and show that, depending on the parameter values we identify, the principal can ignore either ex-post or ex-ante collusion.

Suggested Citation

  • Mehmet Bac & Serkan Kucuksenel, 2005. "Two Types of Collusion in a Model of Hierarchical Agency," Game Theory and Information 0508001, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpga:0508001
    Note: Type of Document - pdf; pages: 18
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/game/papers/0508/0508001.pdf
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    References listed on IDEAS

    as
    1. Kofman, Fred & Lawarree, Jacques, 1993. "Collusion in Hierarchical Agency," Econometrica, Econometric Society, vol. 61(3), pages 629-656, May.
    2. Laffont, Jean-Jacques, 1990. "Analysis of Hidden Gaming in a Three-Level Hierarchy," Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(2), pages 301-324, Fall.
    3. Bac, Mehmet, 1996. "Corruption, Supervision, and the Structure of Hierarchies," Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(2), pages 277-298, October.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kemal Saygili & Serkan Kucuksenel, 2018. "Other-Regarding Preferences in Organizational Hierarchies," ERC Working Papers 1802, ERC - Economic Research Center, Middle East Technical University, revised Feb 2018.

    More about this item

    Keywords

    hierarchy; incentives; collusion;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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