| Abstract : | This essay studies models of multiagent competition, cooperation and collusion, in the presence of moral hazard. We first outline the basic moral hazard model and the fundamental methodological approaches for obtaining a solution. We derive solutions and conclusions for some specialised settings. We then expand our basic structure to the case of multiple agents. In the multiagent framework, we examine models of competition among agents, highlighting the use of mechanisms such as relative-performance evaluation contracts and rank-order tournaments for restoring efficiency. We also investigate contexts where cooperation of agents instead of competition is optimal for the principal. Afterwards, we introduce an agent who specialises in monitoring and we study the principal-supervisor-agent model, the incentives for supervisor-agent collusion and the design of optimal collusion-proof contracts. We obtain results for both the cases of verifiable and unverifiable information and we illustrate the model with an application in firm auditing.
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