Information in Hierarchies

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: We determine the optimal policy to cope with information concealment in a hierarchy where a principal relies on a supervisor to obtain verifiable information about an agent's output. Depending on the information he has obtained, the informed supervisor may either collude with the agent or with the principal and conceal information. The principal has the choice of four policies to cope with information concealment: it can prevent both types of information concealment, allow both of them, or prevent one of them and allow the other one. We characterize the incentive contracts in this environment and show that it is not optimal to allow information concealment, that is, the optimal policy of a hierarchy exposed to multiple types of information concealment is to prevent them all

Keywords: Hierarchy; information concealment (search for similar items in EconPapers)
JEL-codes: D20 D73 L20 M50 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2012-12
New Economics Papers: this item is included in nep-cdm, nep-cta, nep-ore and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:12086

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