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dc.contributor.authorKhalil, Fahaden_US
dc.contributor.authorLawarrée, Jacquesen_US
dc.contributor.authorYun, Sunghoen_US
dc.date.accessioned2007-07-25en_US
dc.date.accessioned2009-07-28T08:15:10Z-
dc.date.available2009-07-28T08:15:10Z-
dc.date.issued2007en_US
dc.identifier.urihttp://hdl.handle.net/10419/26038-
dc.description.abstractRewards to prevent supervisors from accepting bribes create incentives for extortion. This raises the question whether a supervisor who can engage in bribery and extortion can still be useful in providing incentives. By highlighting the role of team work in forging information, we present a notion of soft information that makes supervision valuable. We show that a fear of inducing extortion may make it optimal to allow bribery, but extortion is never tolerated. Even though both increase incentive cost, extortion penalizes the agent after “good behavior”, while bribery penalizes the agent after “bad behavior”. Since bribery occurs when a violation is detected, the bribe is a penalty for “bad behavior”, and helps somewhat in providing incentive. We find that extortion is a more serious issue when incentives are primarily based on soft information, when the agent has a greater bargaining power while negotiating an illegal payment, or when the agent has weaker outside opportunities. Our analysis provides explanations why extortion may be less of a problem in developed countries.en_US
dc.language.isoengen_US
dc.publisherCESifo Münchenen_US
dc.relation.ispartofseriesCESifo working paper 1993en_US
dc.subject.jelD82en_US
dc.subject.jelL23en_US
dc.subject.ddc330en_US
dc.subject.stwKontrolleen_US
dc.subject.stwOrganisationsstrukturen_US
dc.subject.stwAnreizvertragen_US
dc.subject.stwKorruptionen_US
dc.subject.stwFramingen_US
dc.subject.stwTheorieen_US
dc.titleBribery vs. extortion: allowing the lesser of two evilsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn538182431en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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