Collusion, Delegation and Supervision with Soft Information
By Antoine Faure-Grimaud, J. Laffont, David Martimort. 2003
230 citations recorded by the source corpus.
This paper shows that supervision with soft information is valuable whenever supervisors and supervisees collude under asymmetric information and proceeds then to derive an Equivalence Principle between organizational forms of supervisory and productive activities. We consider an organization with an agent privately informed on his productivity and a risk averse supervisor getting signals on the agent's type. In a centralized organization, the principal can communicate and contract with both the supervisor and the agent. However, these two agents can collude against the principal. In a decentralized organization, the principal only communicates and contracts with the supervisor who in turn sub-contracts with the agent. We show that the two organizations achieve the same outcome. We discuss this equivalence and provide various comparative statics results to assess the efficiency of supervisory structures. Copyright 2003, Wiley-Blackwell.
Subfields: Economics and Econometrics, Management Science and Operations Research
View Paper: https://www.semanticscholar.org/paper/cc48cc248086b4aa29539cacb9abf60875f38ecb
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- Dilip Mookherjee
- Masatoshi Tsumagari
- P. Bardhan
- Brian Min
- Miriam A. Golden
- J. Faguet
- L. Christiaensen
- L. Pan
In Management Science and Operations Research
Citations in the corpus
- Compensation Committees and CEO Compensation Incentives in U.S. Entrepreneurial Firms (2004, unknown): “One important extension to this optimal contracting paradigm introduces a thirdlayer into the model and gives rise to a principal--supervisor--agent structure (e.g., Choe and Park 2003; Faure-Grimaud et al. 2003; Kofman and Lawarrée 1993; Tirole 1986, 1992).”
- The Organization of Supplier Networks: Effects of Delegation and Intermediation (2004, background): “The relation of our results to those of existing literature on delegation and collusion (such as Baron and Besanko (1992, 1999), Baliga and Sjostrom (1998), Celik (2002), Faure-Grimaud et al (2003) and Laffont and Martimort (1998)) is discussed in detail in Section 6.”