Marta Troya Martinez to speak on ‘Delegating Relational Contracts with Corruption’

On December 4 a research seminar of the Center for Institutional Studies will take place at the HSE. Marta Troya Martinez (Assistant Professor, New Economic School) will speak on ‘Delegating Relational Contracts with Corruption’.

Abstract:

This article explores the links between productive relational contracts and corruption. The model considers a context where responsibility for a relational contract is delegated to a supervisor who cares in part about the profit of the relationship, and in part about the kickbacks paid by the agent. The agent can both exert effort that increases production and make corrupt kickbacks to the supervisor; the incentives for both come through self-enforcing contracts. We show that delegation to such a supervisor may increase the social welfare. Furthermore, when the future is not very valuable, this is the only way to sustain a productive relational contract. Delegation can ease the time-inconsistency problem of paying ex-post incentive payments; because if the supervisor reneges on such payments, she would damage the corrupt relationship (i.e. she would lose the future stream of kickbacks). We also establish the connection between the agent's compensation scheme, his effort and the associated kickbacks.

Working language: English

Start time: 6.30 pm

Address: 24  Myasnitskaya Ulitsa, Building 3, Room 424

Everyone interested is welcome.

If you need a pass to the HSE, please register here before 1.00 pm, December 4

Contact information: +7 (495) 621 56 32