We consider a model in which customers sequentially negotiate nonexclusive credit or insurance contracts from multiple risk-neutral firms in a market with free entry. Each contract is subject to moral hazard arising from a common noncontractible effort decision.

In settings where the Revelation Principle applies, delegation arrangements are frequently inferior to centralized decision-making, and at best achieve the same level of performance.This paper studies the value of delegation when organizations are constrained by a bound on the number of...

This paper develops a model of budgeting in hierarchical organizations. Each agent (manager) in the hierarchy receives a budget for a task; based on his own information, the agent assigns tasks and budgets to his subordinates, who, in turn, do the same for their subordinates and so forth. Each...