The paper explores a game-theoreticmodel of petty corruption involving a sequence of entrepreneurs and a track of bureaucrats. Each entrepreneur's project is approved if and only if it is cleared by each bureaucrat. The project value is stochastic; its value is observed only by the entrepreneur,...

This note reports part of a larger study of petty corruption by government bureaucrats in the process of approving new business projects. Each bureaucrat may demand a bribe as a condition of approval. Entrepreneurs use the services of an intermediary who, for a fee, undertakes to obtain all of...

We use a model of real-time decentralized information processing to understand how constraints on human information processing affect the returns to scale of organizations. We identify three informational (dis)economies of scale: diversification of heterogeneous risks (positive), sharing of...

We characterize the optimal dynamic price policy of a monopolist who faces quot;viscousquot;demand for its services. Demand is viscous if it adjusts relatively slowly to price changes.We show that with the optimal policy the monopolist stops short of achieving 100% marketpenetration, even when...

In many markets, demand adjusts slowly to changes inprices, i.e., demand is quot;viscous.quot; For such a market, the time path of a firm'sprices acquires added significance, compared with the case of instantaneousdemand response. In this paper I explore some problems in strategic dynamicpricing...

In a diffusion model of an enterprise with variable scale, sufficientconditions are given for the maximization of expected profit (expectedtotal discounted withdrawals) to lead to eventual bankruptcy with probabilityone. The optimal withdrawal policy is an quot;overflow policy,quot; in which the...

We study the properties of real-time decentralized information processing, as a model of human information processing in organizations, and use the model to understand how constraints on human information processing affect the returns to scale of firms. With real-time processing,...