Supervisory information and loss aversion

Dongsoo Shin () and Sungho Yun

Economics Letters, 2021, vol. 204, issue C

Abstract: This study examines the optimality of allowing corrupt interactions (bribery, framing and extortion) between the supervisor and the agent when the agent is loss averse. We show that although inducing bribery leads to effective usage of the supervisory information, preventing all corrupt interactions between the supervisor and the agent by disregarding some of supervisory information can be optimal.

Keywords: Corruption; Supervisory information; Loss aversion (search for similar items in EconPapers)
JEL-codes: D82 K14 K42 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:204:y:2021:i:c:s0165176521001853

DOI: 10.1016/j.econlet.2021.109908

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