This paper surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world.

A Survey of Corporate Governance

This article surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world. CORPORATE GOVERNANCE DEALS WITH the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. How do the suppliers of finance get managers to return some of the profits to them? How do they make sure that managers do not steal the capital they supply or invest it in bad projects? How do suppliers of finance control managers? At first glance, it is not entirely obvious why the suppliers of capital get anything back. After all, they part with their money, and have little to contribute to the enterprise afterward. The professional managers or entrepreneurs who run the firms might as well abscond with the money. Although they sometimes do, usually they do not. Most advanced market economies have solved the problem of corporate governance at least reasonably well, in that they have assured the flows of enormous amounts of capital to firms, and actual repatriation of profits to the providers of finance. But this does not imply that they have solved the corporate governance problem perfectly, or that the corporate governance mechanisms cannot be improved. In fact, the subject of corporate governance is of enormous practical impor

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Wireless Communications

A Course in Game Theory presents the main ideas of game theory at a level suitable for graduate students and advanced undergraduates, emphasizing the theory's foundations and interpretations of its basic concepts. The authors provide precise definitions and full proofs of results, sacrificing generalities and limiting the scope of the material in order to do so. The text is organized in four parts: strategic games, extensive games with perfect information, extensive games with imperfect information, and coalitional games. It includes over 100 exercises.

A Course in Game Theory

Does finance affect economic growth? A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of external finance to firms. Specifically, we ask whether industrial sectors that are relatively more in need of external finance develop disproportionately faster in countries with more developed financial markets. We find this to be true in a large sample of countries over the 1980s. We show this result is unlikely to be driven by omitted variables, outliers, or reverse causality.

/pdf/financial-dependence-and-growth-2meheeba1z.pdf

Financial Dependence and Growth

Auction Design anf Favoritism

Many decisions in private and public organizations are made by groups. The paper explores strategies that the sponsor of a proposal may employ to convince a qualified majority of group members to approve the proposal. Adopting a mechanism design approach to communication, it emphasizes the need to distill information selectively to key members of the group and to engineer persuasion cascades in which members who are brought on board sway the opinion of others. The paper unveils the factors, such as the extent of congruence among group members and between them and the sponsor, and the size and governance of the group, that condition the sponsor's ability to maneuver and get his project approved.

Consensus Building: How to Persuade a Group

The paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations. A member's current incentives are affected by his past behaviour and, because his track record is observed only with noise, by the group's past behaviour as well. The paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature. It shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone, and it derives necessary and sufficient conditions under which group reputations can be rebuilt. Last, the paper applies the theory to analyse when a large firm can maintain a reputation for quality.(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)

"A Theory of Collective Reputations" with Applications to the Persistence of Corruption and to Firm Quality

This paper studies the interactions between an individual's self-esteem and his social environment - in the workplace, at school, and in personal relationships. Because a person generally has only imperfect knowledge of his own abilities, people who derive benefits from his performance (parent, spouse, friend, teacher, manager, etc.) have incentives to manipulate his self--confidence. We first study situations where an informed principal chooses an incentive structure, such as offering payments or rewards, delegating a task, or giving encouragement. We show that extrinsic rewards may have hidden costs - as stressed by psychologists - in that they undermine intrinsic motivation. As a result, they may be only weak reinforcers in the short run, and become negative reinforcers once withdrawn. Similarly, empowerment is likely to increase motivation, while offers of help may create a dependence. More generally, we identify when the hidden costs of rewards are a myth or a reality. We next consider situations where people criticize or downplay the performance of their spouse, child, colleague, or subordinate. We formalize ego-bashing as reflecting battles for dominance or authority within the relationship. Finally, we turn to the self-presentation strategies of privately informed agents. We study in particular how depressed individuals may engage in self-deprecation as a way of seeking leniency (a lowering of expectancies) or a ‘helping hand’ on various obligations.

Self-Confidence & Social Interactions

The paper discusses some specificities of the design of incentives in the public sector and their implications: multiplicity of goals, unclear weighing of these goals, and nonmeasurability of some of them; lack of comparison; heterogeneity of tastes and dispersion of principals. The paper then analyzes career concerns, associated with the prospect of reselection, promotion, or employment in the private sector, and articulated around some mission. There is a potential multiplicity of missions that can be followed by rational officials. The last part studies the division of labor within government, in particular division of labor among ministries and the use of multiple principals to control economic agents, and division of labor aimed at creating information for public decision making and the use of enfranchised advocates of specific interests. Copyright 1994 by Royal Economic Society.(This abstract was borrowed from another version of this item.)

Jean Tirole

Papers

Auction Design anf Favoritism

Consensus Building: How to Persuade a Group

"A Theory of Collective Reputations" with Applications to the Persistence of Corruption and to Firm Quality

Self-Confidence & Social Interactions

The Internal Organization of Government