This paper analyzes abuse of authority in a principal-supervisor-agent hierarchy under moral hazard. We characterize the optimal contracts when the supervisor takes advantage of his authority by blackmailing the agent. We show that the optimal policy for the principal is to deter abuse of...

This paper characterizes the optimal insurance contract in an environment where an informed agent can misrepresent the state of the world to a principal who cannot credibly commit to an auditing strategy. Because the principal cannot commit, the optimal strategy of the agent is not to tell the...

The paper addresses the effect of technological progress on the frontiers of the firm, building on transaction cost theory and agency theory. The model incorporates four types of costs: production, coordination, management, and transaction costs. The market has lower production costs, but higher...

Our objective in this paper is to illustrate and better understand the unavoidable arbitrage between incentives and flexibility in contexts of asymmetric information and to characterize the general features of an appropriate response to this challenge. We show that procedures and institutions in...

In this general equilibrium model, justice and police institutions are treated as a mechanism that induces individuals to extend some desirable productive effort. This determines individual encroachment activities which in turn determine the proportion of aggregate production that fails to be...

This paper discusses some recent evidence exploring job characteristics and labor market conditions upon contract form. We find that there is a great deal of heterogeneity in observed employment contracts in the US, some of which may be explained by firms Nous analysons, dans cet article, le...

This paper investigates the role of productivity on a firm's organizational choice. We expand Antràs and Helpman (2004) by allowing heterogeneous firms to choose between adopting specific and generic inputs. In input-intensive industries, firms face a trade-off between the lower productivity of...

In this paper we introduce a way to systematically organize the choice between different forms of compensation based upon observable job characteristics. Secondly, we explore the determinants of compensation based upon questionnaire responses concerning job characteristics and methods of pay...

Using a large longitudinal, nationally representative workplace-level dataset, we explore the productivity gains associated with computer use and organizational redesign. The empirical strategy involves the estimation of a production function, augmented to account for technology use and...

This paper looks at the dynamic properties of insurance contracts when insurers have better technology at preventing catastrophic losses than the insured. The prevention technology is owned by the insurers and is permanent. If long-term contracts are not possible, the insured is faced with a...