Collusion and Selective Supervision

Alberto Motta ()

No 93, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: This paper studies the role of a policy of inducing in combating collusion within organizations, or in regulatory setups. In a mechanism-design problem involving a principal-supervisor-agent we show the role of endogenous selection of supervisory activity by the principal. One simple example is a mechanism in which the agent bypasses the supervisor and contracts directly with the principal in some states of the world. If collusion between supervisor and agent can occur only after they have decided to participate in the mechanism, this can costlessly eliminate collusion. This result is robust to alternative information structures, collusive behaviors and specification of agent's types. Applications include self-reporting of crimes, tax amnesties, immigration amnesties, work contracts specifying di¤erent degrees of discretion, mechanisms based on recommendation letters, embassies issuing immigration permits, and hiring committees.

Keywords: Collusion; supervision; delegation; mechanism design. (search for similar items in EconPapers)
JEL-codes: C72 D82 L51 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2009
New Economics Papers: this item is included in nep-cta
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0093

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