Faure-Grimaud, Antoine; Laffont, Jean-Jacques; … - London School of Economics (LSE) - 2002
This paper studies the efficiency of collusion between supervisors and supervisees. Building on Tirole (1986)’s results … that deterring collusion with infinitely risk averse supervisors is impossible, while it is costless to do so under risk … neutrality, we develop here a theory of collusion based on a trade-off between the risk premia required by (less extreme) risk …