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The Economics of Agency.
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In this article, the authors discuss the two types of hidden action and hidden information in the principal-agent relationship and evaluate the effect of these two types on the welfare of both the principal and the agent.Abstract:
: The agency relationship is a pervasive fact of economic life. Even in the limited sense in which the concept has traditionally been understood in ordinary and in legal discourse, the principal-agent relation is a phenomenon of significant scope and economic magnitude. But economic theory has recently recognized that analogous interactions are virtually universal in the economy, at least as one significant component of almost all transactions. The common element is the presence of two individuals. One (the agent) must choose an action from a number of alternative possibilities. The action affects the welfare of both the agent and another person, the principal. In this study of organizational efficiency this report discusses the following topics: (1) The Two Types--Hidden Action and Hidden Information;(2) Example--Public Utility Rate Setting; (3) Multiple Principles; (4) The Hidden-Action Model; (5) Monitoring; (6) Multiple Agents and Repeated Relations; (7) An Evaluation of Agency Theory.read more
Citations
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Journal ArticleDOI
Are the reluctant warriors out of control? Why the U.S. military is averse to responding to post‐cold war low‐level threats
TL;DR: The U.S. military is averse to responding to post-cold war low-level threats as mentioned in this paper, and the reluctance of the military to respond to low level threats has been identified as a major reason for its reluctance to defend itself.
Journal ArticleDOI
Consumer Reactions to Firm Signals in Asymmetric Relationships
Sonia San Martín,Carmen Camarero +1 more
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Journal ArticleDOI
Strategic Communication for Capacity Alignment with Pricing in a Supply Chain
TL;DR: In this paper, the authors consider a supply chain comprised of a retailer who sources a product from a manufacturer and explore forecast information sharing between the retailer and the manufacturer by means of cheap talk, showing that meaningful forecast information can be shared truthfully only before the manufacturer sets both the capacity and the wholesale price.
Journal ArticleDOI
Market-Based Reforms in Government: Toward a Social Subcontract?
TL;DR: In this article, the authors examine the evolution and development of the citizen-government relationship, as well as the challenges to this relationship when economic and political forces lead to a greater reliance on market-based policy and public management approaches.
Dissertation
Partisan Manipulation of the Democratic Process and the Comparative Law of Democracy
TL;DR: In this article, the authors argue for institutionally focused judicial oversight of the law of democracy in order to minimize partisan manipulation of the democratic process, and they trace the implications of the principal-agent problem for judicial review of the comparative law of democracies.