Journal ArticleDOI
Moral Hazard in Teams
TLDR
In this article, the authors study moral hazard with many agents and focus on two features that are novel in a multiagent setting: free riding and competition, and show that competition among agents (due to relative evaluations) has merit solely as a device to extract information optimally.Abstract:
This article studies moral hazard with many agents. The focus is on two features that are novel in a multiagent setting: free riding and competition. The free-rider problem implies a new role for the principal: administering incentive schemes that do not balance the budget. This new role is essential for controlling incentives and suggests that firms in which ownership and labor are partly separated will have an advantage over partnerships in which output is distributed among agents. A new characterization of informative (hence valuable) monitoring is derived and applied to analyze the value of relative performance evaluation. It is shown that competition among agents (due to relative evaluations) has merit solely as a device to extract information optimally. Competition per se is worthless. The role of aggregate measures in relative performance evaluation is also explored, and the implications for investment rules are discussed.read more
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Journal ArticleDOI
Target costing, co-ordination and strategic cost management
Ralf Ewert,Christian Ernst +1 more
TL;DR: In this paper, the authors present a theoretical analysis of one of the most prominent approaches of strategic management accounting, i.e. target costing, and show that the more strategic dimensions are added to the problem of cost management, the less valid are "strategic" management accounting proposals in terms of the usual way target costing is employed.
Journal ArticleDOI
From Wires to Partners: How the Internet Has Fostered R&D Collaborations Within Firms
TL;DR: In this paper, the authors examine the relationship between business use of basic Internet technology and the size and geographic composition of industrial research teams between 1992 and 1998 and find robust empirical evidence that basic Internet adoption is associated with an increased likelihood of collaborative patents from geographically dispersed teams.
Journal ArticleDOI
Can good projects succeed in bad communities? Collective Action in the Himalayas
TL;DR: In this article, the authors examined the determinants of collective success in the maintenance of infrastructure projects and found that community-specific factors are important: socially heterogeneous communities have poorly maintained projects and community inequality has a U-shaped relationship with maintenance.
Journal ArticleDOI
Tax policy and yardstick voting in Flemish municipal elections
Jan Vermeir,Bruno Heyndels +1 more
TL;DR: In this article, the authors report an analysis of municipal elections in Flanders during the period 1982 to 2000 and find empirical evidence for yardstick voting, in which incumbents are punished for higher tax rates.
Book ChapterDOI
Experimental Research in Managerial Accounting
TL;DR: In this article, the authors discuss the importance of conducting experimental research in managerial accounting and provide a framework for understanding and assessing the contributions of research in this area, and then use this framework to organize, integrate, and evaluate the existing experimental managerial accounting research.
References
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Posted Content
Production, information costs, and economic organization
Armen A. Alchian,Harold Demsetz +1 more
TL;DR: In this paper, the authors present a set of reprint articles for which IEEE does not hold copyright. Full text is not available on IEEE Xplore for these articles, but full text can be found on the Internet Archive.
Journal ArticleDOI
Moral Hazard and Observability
TL;DR: In this article, the role of imperfect information in a principal-agent relationship subject to moral hazard is considered, and a necessary and sufficient condition for imperfect information to improve on contracts based on the payoff alone is derived.
Posted Content
The Economic Theory of Agency: The Principal's Problem.
TL;DR: The canonical agency problem can be posed as follows as discussed by the authors : the agent may choose an act, aCA, a feasible action space, and the random payoff from this act, w(a, 0), will depend on the random state of nature O(EQ the state space set), unknown to the agent when a is chosen.
Journal ArticleDOI
Reexamination of the perfectness concept for equilibrium points in extensive games
TL;DR: The concept of perfect equilibrium point has been introduced in order to exclude the possibility that disequilibrium behavior is prescribed on unreached subgames [Selten 1965 and 1973]. Unfortunately this definition of perfectness does not remove all difficulties which may arise with respect to unreached parts of the game.
Journal ArticleDOI
Good News and Bad News: Representation Theorems and Applications
TL;DR: In this article, a notion of "favorableness" of news is introduced, characterized, and applied to four simple models: the arrival of good news about a firm's prospects always causes its share price to rise, more favorable evidence about an agent's effort leads the principal to pay a larger bonus, buyers expect that any product information withheld by a salesman is unfavorable to his product, and bidders figure that low bids by their competitors signal a low value for the object being sold.