Supervisory efficiency and collusion in a multiple-agent hierarchy

• 成果类型: Article
• 署名作者: Che, Xiaogang; Huang, Yangguang; Zhang, Le
• 署名单位: University of London; Hong Kong University of Science & Technology; Macquarie University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2021.09.003
• 发表日期: 2021
• 页码: 425-442
• 关键词: Three-level hierarchy; collusion; Supervisory efficiency; multiple agents; optimal contract

摘要

We analyze a principal-supervisor-two-agent hierarchy with inefficient supervision. The supervisor may collect an incorrect signal on the agents' effort levels. When reporting to the principal, the supervisor may collude with one or both agents to manipulate the signal in exchange for a bribe. In the hierarchy, we identify a new trade-off between inefficient supervision and supervisor-agent collusion: Due to the incorrect supervisory signal, truthfully reporting the supervisory signal under collusion proofness may mistakenly punish the agents. As a result, allowing a certain type of collusion helps correct the incorrect signal and provides a higher incentive for the agents to work. We characterize the optimal no-supervision, collusion-proof, and collusive-supervision contracts, and show that the collusive-supervision contract dominates the others when supervisory efficiency is at an intermediate level. (C) 2021 Elsevier Inc. All rights reserved.