The threat of corruption and the optimal supervisory task

@article{Chiara2017TheTO,
  title={The threat of corruption and the optimal supervisory task},
  author={A. D. Chiara and L. Livio},
  journal={Journal of Economic Behavior and Organization},
  year={2017},
  volume={133},
  pages={172-186}
}
In this paper we investigate the task the supervisor should be optimally charged with in an agency modelin which the principal faces corruption concerns. We highlight a fundamental tradeoff between monitoringthe agent’s effort choice and auditing it ex-post. Monitoring proves more effective in tackling corruptionsince the supervisor sends the report before the profit realization. By taking advantage of the supervisor’suncertainty about the state of nature, the principal can design a… Expand

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