We study the characteristics of self-selected candidates in corrupt political systems. Individuals differ along two dimensions of unobservable character: public spirit (altruism) and honesty (disutility from selling out to special interests). Both aspects combine to determine an individual's...

We examine the relationship between the organization of a multi-divisional firm and its ability to adapt production decisions to changes in the environment. We show that even if lower-level managers have superior information about local conditions, and incentive conflicts are negligible, a...

Large companies are usually organized into business units, yet some activities are almost always centralized in a company-wide functional unit. We first show that organizations endogenously create an incentive conflict between functional managers (who desire excessive standardization) and...

We examine the effect of speculation using credit derivatives on the cost of debt and the likelihood of default. The availability of credit default swaps induces investors who are optimistic about borrower revenues to sell protection instead of buying bonds. This benefits borrowers if protection...

Gale-Shapley's deferred acceptance (henceforth DA) mechanism has emerged as a prominent candidate for placing students to public schools. While DA has desirable fairness and incentive properties, it limits the applicants' abilities to communicate their preference intensities, which entails ex...