Oxford Bulletin of Economics and Statistics

We show that allocation of ownership matters even in a long-term relationship where problems of opportunism are less severe unless agents are very patient. Ownership structure is chosen to give the agents best incentives to cooperate. The optimal control structure of the static game restricts the gain from deviation to be the lowest but also the punishment will be minimal. The worst ownership structure of the one-shot game is good in the repeated setting because it provides the highest punishment but bad because the gain from deviation is also highest. We show that when investment costs are very elastic partnership and a hostage type solution arise in equilibrium. While when costs are moderately elastic the results of the one-shot game apply.

Reputation and Allocation of Ownership

Violencia y ordenes sociales: un marco conceptual para la interpretacion de la historia humana registrada

Violence and social orders: a conceptual framework for interpreting recorded human history

We analyze explicit and implicit contracts in a repeated principal-agent model with observable but only partially contractible actions of the agent. It is shown that the set of implementable actions may increase or decrease if additional actions become contractible.

The Interaction of Explicit and Implicit Contracts

This paper reviews the literature on the theory of relational incentive contracts. It motivates the discussion by the classic applications of relational contracts to the GM-Fisher Body relationship and the relationships between Japanese automobile manufacturers and their subcontractors. It presents basic models with symmetric information to illustrate the fundamental issues and then goes on to consider specific investments, the role of legally enforceable contracts alongside relational contracts, private information, multiple suppliers, and issues of organization design.

/pdf/25-relational-incentive-contracts-c8m6j0jdwk.pdf

25. Relational Incentive Contracts

We study a relational contracting model with two agents where each agent faces multiple tasks: effort toward the agent’s own project and helping effort toward another agent’s project. We first propose the two-step approach, which is useful for characterizing the equilibrium of relational contracting models with multiple agents and signals. Then, we show that the optimal task structure is either specialization without help or teamwork with a substantial amount of help for any discount factor: teamwork with a small amount of help is never optimal. Specialization with high powered incentives can be implemented by relative performance evaluation, which is advantageous to self-enforcement. If a positive amount of helping effort is induced, then the evaluation scheme must be substantially different in order to overcome the multitasking problem. Consequently, a small amount of help is dominated by specialization with high powered incentives.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2891201_code1779719.pdf?abstractid=2218330&mirid=1

Relational Contracting and Endogenous Formation of Teamwork

We study a relational contracting model with two agents where each agent faces multiple tasks: effort toward the agent's own project and helping effort toward another agent's project. We show that the optimal task structure is either specialization without help or teamwork with a substantial amount of help: teamwork with a small amount of help is never optimal. Specialization with high-powered incentives can be implemented by relative performance evaluation. However, under teamwork, the evaluation scheme must be substantially different to overcome the multitasking problem. Consequently, a small amount of help is dominated by specialization with high powered incentives.

/pdf/relational-contracting-and-endogenous-formation-of-teamwork-31wqurna24.pdf

Relational contracting and endogenous formation of teamwork

This study investigates the effects of transparency in a sequential moral hazard problem. The principal chooses the transparent or opaque organization, by which we mean that the action of the leader is observable to the follower or not. Compared to the opaque organization, the transparent organization imposes an additional incentive constraint on the follower but may relax the incentive constraint on the leader. Informativeness of the signal crucially affects the optimal transparency as well as the optimal incentive scheme. Transparent (resp. opaque) organization tends to be preferred when the optimal incentive contract exhibits joint (resp. relative) performance evaluation.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2755465_code1779719.pdf?abstractid=2639935&mirid=4

Transparency and Performance Evaluation in Sequential Agency

This study investigates the effects of transparency in a sequential moral hazard problem, where a leader and a follower consecutively take an action. The principal chooses whether the organization is transparent or opaque, by which we mean that the action of the leader is observable to the follower or not. Compared with the opaque organization, the transparent organization imposes an additional incentive constraint on the follower but may relax the incentive constraint on the leader. Informativeness of the signal crucially affects the optimal degree of transparency as well as the optimal incentive scheme. The transparent (respectively, opaque) organization tends to be preferred when the optimal incentive contract exhibits joint (respectively, relative) performance evaluation.

This study examines the welfare effects of patent pools with compulsory independent licensing and argues that forcing patent pools to allow each individual patent holder to license the technology independently does not necessarily work as a screening tool to select only desirable patent pools. We consider a duopolistic model in which some users demand only specific technologies and demonstrate that compulsory independent licensing enables patent holders to undertake anti-competitive price discrimination. Moreover, since forming a patent pool mitigates the price competition forced by lower grade entrants, combination with independent licensing may worsen welfare further.

Akifumi Ishihara

Papers

Relational Contracting and Endogenous Formation of Teamwork

Relational contracting and endogenous formation of teamwork

Transparency and Performance Evaluation in Sequential Agency

Transparency and Performance Evaluation in Sequential Agency

Dark Sides of Patent Pools with Independent Licensing