RT Monograph
SR 00
A1 Angelucci, Charles
A1 Russo, Antonio
T1 Moral Hazard in Hierarchies and Soft Information
YR 2012
FD 2012-10
VO 12-343
K1 collusion
K1 extortion
K1 delegation
K1 mechanism design
AB We investigate the scope for supervisory activities in organizations in which  information is non-verifiable and opportunism severe. A principal-supervisor-agent  hierarchy is considered. Side-contracts between supervisor and agent may be reached  both before and after the agent has chosen his hidden action. We find that the supervisor  is useful if and only if appointed before the agent has chosen his action. We also show  that delegation of payroll authority is suboptimal. Finally, some insights concerning the  optimal design of verification activities are provided: when information is non-verifiable,  the supervisor should be employed as a monitor rather than as an auditor.
T2 TSE Working Paper
PB TSE Working Paper
AV Published
LK https://publications.ut-capitole.fr/id/eprint/15413/
UL http://tse-fr.eu/pub/26384