Journal ArticleDOI
Monitoring and collusion with 'soft' information
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In this paper, it was shown that it is profitable to employ a supervisor when information is "soft" even though the three parties can collude, and that standard applications of the PCA model to regulation and auditing have more scope than previously thought.Abstract:
In the standard principal-supervisor-agent model with collusion, Tirole (1986) shows that employing a supervisor is profitable for the principal if the supervisor's signal of the agent's cost of production is 'hard' (i.e., verifiable but hideable). Anecdotal evidence suggests that information is sometimes 'soft' (i.e., unverifiable). We show that, in fact, it is profitable to employ a supervisor when information is 'soft' even though the three parties can collude. Therefore, standard applications of the principal-supervisor-agent model to regulation and auditing have more scope than previously thought. Copyright 1999 by Oxford University Press.read more
Citations
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Journal ArticleDOI
Information: Hard and Soft
TL;DR: Benmelech et al. as mentioned in this paper survey the literature to understand how information type influences the continued evolution of financial markets and institutions and present the relative advantages of hard and soft information.
Journal ArticleDOI
Estimating the Effect of Hierarchies on Information Use
Jose Maria Liberti,Atif Mian +1 more
TL;DR: In this paper, a novel data set put together from credit dossiers of large corporate loan applicants enables us to observe the information collected by loan o-cers and also how it is used by the ultimate loan approving o-cer.
Journal ArticleDOI
Collusion, Delegation and Supervision with Soft Information
Antoine Faure-Grimaud,Antoine Faure-Grimaud,Jean-Jacques Laffont,David Martimort,David Martimort +4 more
TL;DR: In this article, the equivalence principle between organizational forms of supervisory and productive activities is derived and comparative statics results are provided to assess the efficiency of the two supervisory structures.
Journal ArticleDOI
Collusion, Delegation and Supervision with Soft Information
TL;DR: In this article, the equivalence principle between organizational forms of supervisory and productive activities is derived and comparative statics results are provided to assess the e¢ciency of the two supervisory structures.
Journal ArticleDOI
Bribery versus extortion: allowing the lesser of two evils
TL;DR: In this paper, a trade-off between bribery and extortion is discussed, and it is shown that a fear of inducing extortion may make it optimal to tolerate bribery, but extortion is never allowed.
References
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Journal ArticleDOI
Hierarchies and Bureaucracies: On the Role of Collusion in Organizations
TL;DR: In this article, the analysis of hierarchical structures does not boil down to a compounding of the basic inefficiency, due to the fact that going from the simple two-tier principal/agent structure to more complex ones introduces the possibility of asymmetric information and insurance motives (or limited liability constraints).
Book
Men Who Manage
TL;DR: In every administrative group, gaps appear between granted and exercised authority as mentioned in this paper, and these divergences are inherent in a continuing process of reorganization, authorized or not, given the nature of personnel, and the official frameworks they create, even the cliques essential for intertwining official and informal actions occasionally get out of hand and must be curbed.
Journal ArticleDOI
The Politics of Government Decision-Making: A Theory of Regulatory Capture
Jean-Jacques Laffont,Jean Tirole +1 more
TL;DR: In this article, the authors develop an agency-theoretic approach to interest-group politics and show that the organizational response to the possibility of regulatory agency politics is to reduce the stakes interest groups have in regulation.
Book ChapterDOI
Collusion and the Theory of Organizations
TL;DR: In the social sciences, collusion and the concomitant concepts of group, power, burecracy, and politics have been studied for a long time (see as mentioned in this paper for a survey).
Posted Content
Multiple Referrals and Multidimensional Cheap Talk
TL;DR: In this paper, it was shown that the dimensionality of the uncertain variable has an important qualitative impact on results and yields interesting insights into the'mechanics' of information transmission.