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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Tolerance for failure and corporate innovation
Xuan Tian,Tracy Yue Wang +1 more
TL;DR: In this paper, a measure of VC investors' failure tolerance by examining their willingness to continue investing in underperforming ventures was developed, and the authors found that VC firms backed by more failure-tolerant VC investors are significantly more innovative.
Journal ArticleDOI
Collusive Bidder Behavior at Single-Object Second-Price and English Auctions
TL;DR: In this paper, a model of collusive bidder behavior at single-object second-price and English auctions is provided, and the model is generalized to permit the formulatio n of coalitions and a strategic response by the auctioneer.
Posted Content
Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?
TL;DR: In this article, the authors are grateful to Avner Ben-Ner, Jacques Defourny, Saul Estrin, Felix FitzRoy, Barbara Lee, Bentley MacLeod, Egon Neuberger, Jeffrey Pliskin, Stephen C. Smith, and three anonymous referees for comments on various drafts of this paper.
Book
The Handbook of Organizational Economics
Robert Gibbons,John Roberts +1 more
TL;DR: The Handbook of Organizational Economics as mentioned in this paper surveys the major theories, evidence, and methods used in the field of organizational economics, including the roles of individuals and groups in organizations, organizational structures and processes, the boundaries of the firm, contracts between and within firms, and more.
Journal ArticleDOI
Contracts and Technology Adoption
TL;DR: In this article, the authors develop a tractable framework for the analysis of the relationship between contractual incompleteness, technological complementarities, and technology adoption, where a firm chooses its technology and investment levels in contractible activities by suppliers of intermediate inputs, anticipating payoffs from an ex post bargaining game.
References
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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.