Supervision in Firms

Kouroche Vafaï ()
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Kouroche Vafaï: Université Paris Descartes - Sorbonne Cité et Centre d'Economie de la Sorbonne - Paris School of Economics, https://centredeconomiesorbonne.cnrs.fr

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: To control, evaluate, and motivate their agents, firms employ supervisors. As shown by empirical investigations, biased evaluation by supervisors linked to collusion is a persistent feature of firms. This paper studies how deceptive supervision affects agency relationships. We consider a three-level firm where a supervisor is in charge of producing a verifiable report on an agent's output. Depending on the output he has observed, the supervisor may either collude with the agent or with the principal, and make an uniformative report. We show that the proliferation of collusive activities in firms: modifies the configuration of the optimal preventive policy, may increase the expected cost of preventing each type collusion, is beneficial to the supervisor and detrimental to the agent, and is not always harmful

Keywords: Firm; group decision; control; biased supervision (search for similar items in EconPapers)
JEL-codes: D20 D73 L20 M50 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2012-12
New Economics Papers: this item is included in nep-bec, nep-cta, nep-hrm, nep-mic and nep-reg
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http://mse.univ-paris1.fr/pub/mse/CES2012/12084.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:12084

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