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THE EFFECTS OF PERCEIVED FAIRNESS AND COMMUNICATION ON HONESTY AND COLLUSION IN A MULTI-AGENT SETTING

Agents who perform interrelated tasks or work in similar local conditions often observe each other's actions and local signals. However, such information is often costly for the principal to obtain. Analytical models show that in such a situation, a peer reporting system with a verification mechanism (using one agents information to verify the others) and a reward for truthful whistle blowing can induce agents to report honestly and thereby help the principal achieve the first-best outcome. However, behavioral research suggests that the agents perception regarding the fairness of the principal as well as cheap talk among agents may affect both how honestly agents report and how willing they are to blow the whistle on their peers. The results of the experiment show that under a peer reporting system, the agents' perception regarding the fairness of the principal positively affects the agents reporting honesty and negatively affects the agents rate of collusion. Communication between agents decreases their honesty and their whistle blowing when the principal is perceived as unfair, but not when the principal is perceived as fair.

Identiferoai:union.ndltd.org:PITT/oai:PITTETD:etd-05312006-144401
Date11 July 2006
CreatorsZhang, Yue
ContributorsJacob Birnberg, Harry Evans, Vicky Hoffman, Donald Moser, Kristy Towry
PublisherUniversity of Pittsburgh
Source SetsUniversity of Pittsburgh
LanguageEnglish
Detected LanguageEnglish
Typetext
Formatapplication/pdf
Sourcehttp://etd.library.pitt.edu/ETD/available/etd-05312006-144401/
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