Monitoring and Collusion with "Soft" Information

Sandeep Baliga ()

The Journal of Law, Economics, and Organization, 1999, vol. 15, issue 2, 434-40

Abstract: In the standard principal-supervisor-agent model with collusion, Tirole (1986) shows that employing a supervisor is profitable for the principal if the supervisor's signal of the agent's cost of production is 'hard' (i.e., verifiable but hideable). Anecdotal evidence suggests that information is sometimes 'soft' (i.e., unverifiable). We show that, in fact, it is profitable to employ a supervisor when information is 'soft' even though the three parties can collude. Therefore, standard applications of the principal-supervisor-agent model to regulation and auditing have more scope than previously thought. Copyright 1999 by Oxford University Press.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (19)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jleorg:v:15:y:1999:i:2:p:434-40

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Journal of Law, Economics, and Organization is currently edited by Andrea Prat

More articles in The Journal of Law, Economics, and Organization from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().