Collusion and Renegotiation in a Principal–Supervisor–Agent Relationship

B-Tier
Journal: Scandanavian Journal of Economics
Year: 1997
Volume: 99
Issue: 4
Pages: 497-518

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We describe a principal–supervisor–agent relationship in which agent and supervisor may collude. To prevent collusion, the principal may contract on a noisy signal which is correlated with the occurrence of collusion. When the signal is informative enough, the principal uses it and no collusion occurs in equilibrium. These contracts, however, are ex post inefficient and are only optimal if the principal can commit not to renegotiate. With renegotiation it is never optimal for the principal to prevent collusion and, at the same time, condition contracts on the signal. In fact, when the signal is informative enough collusion occurs in equilibrium.

Technical Details

RePEc Handle
repec:bla:scandj:v:99:y:1997:i:4:p:497-518
Journal Field
General
Author Count
1
Added to Database
2026-01-29