This paper analyzes a simple modification of a standard mechanism in hierarchical centralized structures with hard-information supervision. The supervisor receives a signal about the productive agent's technology. With some probability the supervisor learns the true agent's technology, otherwise...

This paper studies the optimal compensation policy for a corruptible inspector, in charged with monitoring evasion from a taxpayer. Namely, I discuss how the optimal compensation policy varies according to the timing of collusion, which is allowed to occur either before or after inspection takes...

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...

We consider a model of law enforcement where homogenous, risk neutral, and corruptible inspectors are responsible for monitoring citizens who may have committed criminal acts. A welfare maximizing, budget constrained government can implement appropriate wage policies to prevent collusion, but we...