A main prediction of agency theory is the well known risk-incentive trade-off. Incentive contracts should be found in environments with little uncertainty and for agents with low degrees of risk aversion. There is an ongoing debate in the literature about the first trade-off. Due to lack of...

In economic approaches it is often argued that reputation considerations influence the behavior of individuals or firms and that reputation influences the outcome of markets. Empirical evidence is rare though. In this contribution we argue that a positive reputation of sellers should have an...

In this paper we compare the two standard forms of international investments in developing countries, debt and foreign direct investment, form a finance perspective. It is shown that the sovereign risks associated with debt finance are generally less severe than the ones which come with FDI. FDI...

J.M. Grandmont claims in his paper "Transformations of the Commodity Space, Behavioral Heterogeneity, and the Aggregation Problem" (1992) to model "behavioral heterogeneity". By a specific parametrization he defines a subset of all demand functions and assumes that the distribution of the...

This article examines the validity of a gains from trade proposition in a world in which the direction of technological change is determined endogenously. We first give an extreme example in which a part of the world that would smoothly develop under autarchy forever remains underdeveloped under...

This paper analyses management style as a governance mechanism in agency relationships when the lack of verifiable information restricts the contracting possibilities. Specifically, it investigates whether decision making should be supplemented by prior verification, and how these tasks should...

We present a general equilibrium model of imperfect competition to analyze Rosenstein-Rodan's idea of the 'Big Push'. Simultaneous investment of many sectors of the economy can be profitable for everyone although no sector can break even industrializing alone. The mechanism that generates such...

This paper analyses the relative efficiency of internal and external monitors. It confirms the intuition that, if the principal and her employees share aligned interests, internal monitoring is superior to external monitoring; vice versa if interests diverge. This result is not robust for two...

We consider two types of firms both operating in two countries. The demand side of the markets of the two countries are separated and each type of firm produces its good in one of these countries. We study the effect of an exchange rate change on the competitive equilibrium prices in each...

Consider a random permutation of a finite number $n$ of known elements representing rewards. These rewards will be made or not made with certain known probabilities. At any stage a reward made can be accepted or rejected, there is no recall and only one reward can be accepted. The problem is to...