We explain why organizations that limit the voice of their agents can benefit from granting them an exit option. We study a hierarchy with a principal, a productive supervisor and an agent. Communication is imperfect in that only the supervisor can communicate with the principal, while the agent...

We study legal restrictions on private contracting in the form of limitations on the severity of non-monetary punishments. We locate the rationale for such restrictions in externalities that parties impose on future relationships: punishments that lower an agent's future productivity may lower...

We develop a model in which firms set their salary levels before matching with workers. Wages fall relative to any competitive equilibrium while profits rise almost as much, implying little inefficiency. Furthermore, the best firms gain the most from the system while wages become compressed. We...

We consider two-round elimination tournaments where players have fixed resources instead of cost functions. Two approaches are suggested. If the players have the same resources and a success function is stochastic, then players always spend more resources in the first than in the second round in...

When a seller gives a buyer a right of first refusal, although it reduces the competing buyers' profits and creates an inefficiency, it always increases the joint profit of the seller and the right holder. Right of first refusal with a consideration (e.g., a payment from the right holder to the...

This paper considers the possibility that a seller can contract with one uninformed buyer prior to an auction involving two potential buyers. In a more general setting than previous literature, strategic ex-ante contracts not only extract rent from entrants, but could also mitigate the...