We study the effect on cost overruns of two different auction formats, the first price sealed bid and the average bid, conditional on whether entry is open or restricted. The first price format awards the contract to the lowest bid, while the average bid format awards the contract to the bid...

We study the optimal procurement mechanism when contract breach and abandoning a project may be efficient, either because of completion costs higher than anticipated or because of new and more lucrative opportunities for the contractor. When contractors have private information about their...

The authors discuss the concept of 'team human capital' and study the renegotiation of labor compensation after team members privately observe their own reservation wage. As labor productivity can only be high if the number of quits does not exceed a threshold, decisions concerning acceptance of...