In many situations the individuals who can generate some output must enter a contest for appropriating this output. This paper analyses the investment incentives of such agents and the role of incumbency advantages in the contest. Depending on the advantages, an increase in the productivity of...

This paper studies how reduced oversight creates an incentive for process innovation. With incomplete contracts, tight monitoring of workers creates a ratchet effect of innovation. Under reduced oversight, a worker accrues private knowledge about his innovation, which serves as a substitute for...

This article suggests a shift in how we think about agency. The essential function of agency law lies not in enabling the delegation of authority, as is widely suggested, but more significantly in its effect on creditors' rights through asset partitioning. Most of what agency law does in...

In many situations the individuals who can generate some output must enter a contest for appropriating this output. This paper analyses the investment incentives of such agents and the role of incumbency advantages in the contest. Depending on the advantages, an increase in the productivity of...

As a contribution to the wider institutional analysis of China's enterprise reform, this paper argues that the principal agent theory is not suitable for analysis of China's public enterprises, notably state-owned enterprises, as by definition, it requires a decision-making principal and clearly...

We report on several experiments on the optimal allocation of ownership rights. The experiments confirm the property rights approach by showing that the ownership structure affects relationship-specific investments and that the subjects achieve the most efficient ownership allocation starting...