Corruption; Supervisory information; Loss aversion
Issue Date
2021-07
Publisher
ELSEVIER SCIENCE SA
Citation
ECONOMICS LETTERS, v. 204, Page. 1-4
Abstract
This study examines the optimality of allowing corrupt interactions (bribery, framing and extortion) between the supervisor and the agent when the agent is loss averse. We show that although inducing bribery leads to effective usage of the supervisory information, preventing all corrupt interactions between the supervisor and the agent by disregarding some of supervisory information can be optimal.