Showing papers on "Principal (commercial law) published in 1983"
TL;DR: In this article, the optimal strategy of the principal is examined in an environment where there are (ex post ) limitations on the maximum penalty that can be imposed on a risk-neutral agent.
556 citations
01 Jan 1983
TL;DR: An agent differs from an employee by the fact that the activities of the agent are not monitored in detail as mentioned in this paper, and the principal does not give his agent contingency orders on how to handle each possible decision situation as he does to supervised employees.
Abstract: Publisher Summary This chapter provides an overview on principals and agents. An agency relationship between two individuals exists when the agent is authorized by the principal to make, modify, or cancel contracts with a third party in the principal's name. An agent differs from an employee by the fact that the activities of the agent are not monitored in detail. The principal does not give his agent contingency orders on how to handle each possible decision situation as he does to supervised employees. Some guidelines may be spelled out and the agent may be monitored to some extent, but the essential feature of the agency relationship is the freedom of the agent to determine activities and contracts independently. The power to act independently for the principal can be used by the agent for his own benefit. A contract makes the contractor liable for damages, but the legally determined financial compensation may not be a satisfactory alternative to specific performance. The contract could spell out the principal's desires for performance in each possible contingency.
22 citations
TL;DR: In this paper, the authors present an economic rationale for Japanese labor management practice, which is based upon the framework of the principal-agent relationship, where the principal (employer) offers to the agent (employee) a contract (which specifies contract length, wage rate and profit sharing schedule) so as to maximize the expected value of a stream of future profits.
Abstract: Two unique characteristics of modern Japanese labor management practice are the prevalence of lifetime employment and of biannual bonuses. In contrast these practices are relatively infrequent in the United States. Many of the explanations offered so far attribute the difference to cultural, and/or institutional differences in the two countries. In this paper, we present a different point of view; one that provides an economic rationale for various practices. The model developed is based upon the framework of the principal-agent relationship. The principal (employer) offers to the agent (employee) a contract (which specifies contract length, wage rate and profit sharing schedule) so as to maximize the expected value of a stream of future profits. The agent in turn accepts this contract if and only if he can make himself better off in doing so. If the appropriate level of effort can be specified and enforced by the principal, there is no ‘agency problem’. The resulting outcome is said to be ‘first best’. On the other hand, in many situations, the principal is not able to enforce the effort level (due to, for example, monitoring costs or lack of observability). Thus, in the presence of this agency problem, the appropriate level of effort is chosen, for any given contract, by the agent in such a way that his expected utility is maximized. The optimal contracts in this framework are said to be ‘second best’. The main focus in the paper is on the second best case. We find that the optimal contracts depend upon various factors such as labor productivity, disutility of effort, risk aversion, alternate market opportunity, transaction cost, demand conditions and discount rates. By using numerical examples obtained by dynamic programming, we illustrate that any form of employment policy can be optimal for the appropriate situations. In addition we estimate the agency cost (or the incentive gap) between the first best and second best solutions.
13 citations
Book•
01 Jan 1983
TL;DR: The meaning of negligence the duty to take care principal defencer and discharges from liability damages discovery, evidence, trial, proof of casual negligence the standard of care dangerous premises persons professing some special skill highways and transport employment at common law liability.
Abstract: The meaning of negligence the duty to take care principal defencer and discharges from liability damages discovery, evidence, trial, proof of casual negligence the standard of care dangerous premises persons professing some special skill highways and transport employment at common law liability for breach fo statutory duty dangerous things, Ryladt versus Fletcher animals product liability death insurance and other compensation schemes.
7 citations
5 citations
TL;DR: In this article, the authors present access rules, deriving from these two laws, are discussed and an attempt is made briefly to evaluate their consequences, and they make use of the Swedish Secrecy Act of 1980.
3 citations
TL;DR: The Australian Freedom of Information Act (AFIA) as mentioned in this paper is the product of a decade of debate regarding the right of citizens to inspect the records of government, which was introduced in Australia in 1982.
2 citations
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TL;DR: In the United States, the acquisition of mining claims on federal land is a right granted by the Mineral Location Law of 1872, also known as the 1872 Mining Law and the Hard Rock Mining Law as discussed by the authors.
Abstract: Acquisition of mining claims on federal land is a right granted by the Mineral Location Law of 1872, also known as the “1872 Mining Law” and the “Hard Rock Mining Law” (17 Stat. 91). This law, passed by Congress on May 10, 1872, continued a policy of opening mineral lands to exploration, and the acquisition of mining rights on federally owned land is, for the most part, still governed by this law. The principal exceptions are a series of leasing acts that have made certain nonmetalliferous minerals and all land on the Outer Continental Shelf exclusively leasable and not open to acquisition by claim staking, and the Materials Disposal Act of 1947 (61 Stat. 681) as amended by the Surface Resources Act of 1955 (69 Stat. 367), which defined and withdrew a group of salable minerals, or “common varieties,” from mineral entry. There are, of course, numerous additional federal statutes relating to mining on federal lands, and state laws are permitted to elaborate on some aspects of mining law where the federal laws are silent.