In the standard principal-supervisor-agent model with collusion, Tirole (1986) shows that employing a supervisor is profitable for the principal if the supervisor's signal of the agent's cost of production is 'hard' (i.e., verifiable but hideable). Anecdotal evidence suggests that information is...

This paper investigates the use of reputation in an economy where principals hire agents for two different kinds of tasks, in which the agents have differing aptitudes. Principal-agent matches are remade every period, but a principal can acquire some information on the past behavior of her...