A resource-allocation mechanism is viewed as a gigantic information processing system. Such a system utilizes the knowledge dispersed among economic agents concerning their preferences, technologies, and endowments to determine how resources flow. The chapter discusses that information is...

A very widespread economic situation is that of the relation between a principal and an agent. Even in ordinary and in legal discourse, the principalagent relation is significant in scope and economic magnitude. The chapter discusses that the common element is the presence of two individuals....