Existing models of hierarchical agency within the economics literature, almost without exception, assume a conventional hierarchical form. They assume clear lines of authority where each subordinate reports to one and only one supervisor. This dissertation, inspired by experience with the matrix form of organization, suggests an alternate view. First, using the structure of a simple monitoring problem where a supervisor acts as intermediary between a principal and an agent, this dissertation compares the conventional model of hierarchical agency to a revised model where overlapping responsibilities allow for competition between supervisors in the monitoring function. Modeling assumptions, standard to the collusion literature, are explored. A repeated-game model is then developed to extend the comparison to an environment of self-enforcing side-contracting. Finally, illustrating the parallels between this hierarchical agency problem and the sender-receiver problem of obtaining information from interested experts, a third model points out how this prescription for the use of competition to induce information provision can be generalized to broader contexts of information asymmetry.;This analysis, and its potential for generalization to a broad range of organizational control and delegation contexts, questions the standard model of single-channel hierarchies. What precisely does it mean to be a supervisor in a monitoring hierarchy? This dissertation argues that, as defined by the collusion literature, a supervisor/monitor is simply a source of information for the principal (on agent performance) that behaves strategically. Using this definition, it is evident that the existence of multisupervisor hierarchies will be commonplace. The prescription for organizational design is to consider the potential for multichannel information flows and lines of authority. Incentive systems can use these structures to induce intrafirm competition that, analogous to competition in the marketplace, can reduce opportunities for collusion and informational rent extraction in hierarchies. Applications of this logic can be found not simply in the area of organizational design, but also in areas of institutional design (regulation, procurement, and public choice). Applications can also be found in general contexts of information provision by interested experts.
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