Journal ArticleDOI
The role of risk in contract choice
Douglas W. Allen,Dean Lueck +1 more
Reads0
Chats0
TLDR
In this paper, the authors test the major implications of a principal-agent model of contracts using detailed data on more than 4,000 individual contracts from modern North American agriculture and find some support for models that assume risk-neutral contracting parties and stress multiple margins for moral hazard and enforcement costs.Abstract:
Structuring contracts to share risk in light of incentive problems is the central premise of contract theory, yet the risk-sharing implications have rarely been thoroughly tested using micro-level contract data. In this article we test the major implications of a principal-agent model of contracts using detailed data on more than 4,000 individual contracts from modern North American agriculture. On a case-by-case basis, our evidence fails to support the standard principal-agent model with risk aversion as an explanation of contract choice in modern North American farming. At the same time, we find some support for models that assume risk-neutral contracting parties and stress multiple margins for moral hazard and enforcement costs. Copyright 1999 by Oxford University Press.read more
Citations
More filters
Journal ArticleDOI
The New Institutional Economics: Taking Stock, Looking Ahead
TL;DR: In this paper, the authors examine the progressive development of the new institutional economics over the past quarter century, distinguishing four levels of social analysis, with special emphasis on the institutional environment and the institutions of governance.
Journal ArticleDOI
Endogenous Matching and the Empirical Determinants of Contract Form
TL;DR: In this article, the authors address the endogenous matching problem using a data set on agricultural contracts between landlords and tenants in early Renaissance Tuscany and find that tenants' risk aversion appears to have influenced contract choice.
Journal ArticleDOI
Endogenous matching and the empirical determinants of contract form
TL;DR: In this paper, the authors address the endogenous matching problem using a data set on agricultural contracts between landlords and tenants in early Renaissance Tuscany and find that tenants' risk aversion appears to have influenced contract choice.
Journal ArticleDOI
Research Note---The Role of Organizational Controls and Boundary Spanning in Software Development Outsourcing: Implications for Project Performance
Anandasivam Gopal,Sanjay Gosain +1 more
TL;DR: It is argued that boundary spanning between the vendor and client moderates the relationship between formal controls instituted by the vendor on the development team and project performance, and boundary-spanning activities significantly improve the effectiveness of formal controls.
Journal ArticleDOI
Econometrics of Contracts : an Assessment of Developments in the Empirical Literature on Contracting
TL;DR: In this paper, the contributions of the theories des contrats and the theory des couts de transaction to the theory of l'agence and of the couts of transaction are analyzed.
References
More filters
Journal ArticleDOI
The Nature of the Firm
TL;DR: In this paper, it is shown that a definition of a firm may be obtained which is not only realistic in that it corresponds to what is meant by a firm in the real world, but is tractable by two of the most powerful instruments of economic analysis developed by Marshall, the idea of the margin and that of substitution.
Journal ArticleDOI
Transaction-Cost Economics: The Governance of Contractual Relations
TL;DR: For instance, the authors argues that if transaction costs are negligible, the organization of economic activity is irrelevant, since any advantages one mode of organization appears to hold over another will simply be eliminated by costless contracting.
Journal ArticleDOI
Multitask Principal–Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design
Bengt Holmstrom,Paul Milgrom +1 more
TL;DR: In this article, a principal-agent model that can explain why employment is sometimes superior to independent contracting even when there are no productive advantages to specific physical or human capital and no financial market imperfections to limit the agent's borrowings is presented.
Book
Economics, Organization and Management
Paul Milgrom,John Roberts +1 more
TL;DR: In this article, a systematic treatment of the economics of the modern firm is presented, drawing on the insights of a variety of areas in modern economics and other disciplines, but presenting a coherent, consistent, and innovative treatment of central problems in organizations of motivating people and coordinating their activities.
Journal ArticleDOI
The Provision of Incentives in Firms
TL;DR: In this article, a review of existing work on the provision of incentives for workers is presented, and the authors evaluate this literature in the light of a growing empirical literature on compensation from two perspectives: first, an underlying assumption of this literature is that individuals respond to contracts that reward performance.