The Analysis of the Collusion Theory in the There Hierarchies
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The three hierarchies organization model is established by introducing the supervisor, and the potential collusion behavior in the structure is analyzed. Then the theoretical proof about the principal′s hiring the supervisor and concerning the collusion is given by using the cost benefit approach.Keywords:
Supervisor
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We reconsider Tirole's framework of a three-tier principal-agent problem, in which he has shown that an incentive problem is caused by the possibility of monetary side payments between the agent and the middle -level supervisor. We consider the case where monetary transfers are not possible, but a different, implicit kind of collusion arises because the supervisor cares about the utility enjoyed by his subordinate. This approach avoids the crucial problem of how an explicit side contract could be enforced. We show that the difference in the cause of collusion leads to a difference in the way in which collusion is prevented: the agent's incentive scheme is used to give incentives to the supervisor. An interdependence between incentive schemes thus follows from utility interdependence.
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In externality problem, administrator, supervisor and enterprise who release pollution construct three-tier hierarchy of principal, the third part and agent construction. In this paper, the model of that-under situation of supervisor is honest or not, as a principal, according to the information which was supplied by supervisor, administrator allows or not allows enterprise to collusion between the other two parts-is established. And, through analysis and demonstration of related cost and model, the optimal range of the collusion was got. At last, simulated calculation and conclusion were achieved.
Supervisor
Externality
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This paper considers a principal-agent relationship and explores the incentive provision when the agent's performance cannot be verified. It contrasts two alternatives for the principal to provide incentives: (i) to subjectively evaluate the agent's performance; and (ii), to delegate this task to a supervisor. Supervision induces contractible information about the agent's performance, but could result in vertical collusion. This paper demonstrates that collusion-proofness can require an inefficiently high payment to the supervisor, and too low powered incentives for the agent. The eventuality of collusion is further found to potentially (i), improve the profitability; and (ii), facilitate the achievement of relational contracts based upon subjective performance evaluations.
Delegate
Supervisor
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This paper investigates how the possibility of collusion between members of an organization affects the choice of organizational design. We consider a moral hazard environment in which a principal chooses the organizational structure before designing contracts. The principal has the choice between a principal-agent organization, where it monitors the output produced by the agent itself, and a principal-supervisor-agent hierarchy, where monitoring is delegated. We identify the conditions under which the possibility of collusion in a principal-supervisor-agent hierarchy entails the superiority of a principal-agent organization. The results suggest that the possibility of collusion may set a limit to the size of organizations.
Organizational architecture
Supervisor
Moral hazard
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This paper describes a principal-agent relationship with a supervisor who has information about the agent. The agent and the supervisor have the possibility to collude and misinform the principal. In accordance with the existing literature there exists an optimal contract which excludes collusion in equilibrium. The optimal contract exhibits, however, ex-post inefficient and creates scope for renegotiation. If a renegotiation-stage is incorporated in the game then for some parameter constellations the optimal contract is a contract which necessarily induces collusion. The paper thus shows that the principal's behavior toward ex-post inefficiencies may determine whether collusion occurs in equilibrium.
Supervisor
Scope (computer science)
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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.
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Supervisor
Budget constraint
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Supervisor
SIGNAL (programming language)
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This paper derives 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.
Supervisor
Delegation
Comparative statics
Organizational structure
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