On the optimality of allowing collusion

Article Abstract:

Many firms use financial rewards to encourage managers to improve performance. Such an incentive program may be vulnerable to collusion between performance auditors and managers. However, studies have shown that firms may find it optimal to allow collusion in cases where the probability of hiring a dishonest auditor is high. Allowing collusion may also be optimal when the punishment for collusion is high.

Research, Crimes against, Auditing, Ethical aspects, Corporations, Incentives (Business), Corporate corruption

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A comment on 'The Kaldor compensation test and rational choice.'

Article Abstract:

The Lemma 2 which W. Bossert utilized to prove Theorem 2 is flawed. The results of his study on the Kaldor compensation test and rational test contradicted the conclusion of Lemma 2. In addition, the study included a theorem which was incorrect and supported a wrong conclusion. An alternative proof for Lemma 2 is presented. The proof utilizes a Pareto optimal argument to support the lemma.

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Catching the agent on the wrong foot: ex-post choice of monitoring

Article Abstract:

The problem of asymmetric information, and monitoring of agents, is examined in detail, using multiple performance measures. Ex post benefits are explored in this model.

Economic aspects, Agency (Law)

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