The paper introduces Knightian uncertainty, formalized by non-additive probabilities, within a simple agency model. The framework appears to be suitable to deal with issues like delegation in innovative firms. The paper stresses that, with Knightian uncertainty, if the principal is pessimistic...

This paper examines the origins of property rights in the presence of production uncertainty. Since stealing others' possessions is permitted under anarchy, the winner is able to enjoy the lion's share of total outputs produced by all parties, and this generates a diversification effect, since...

Secure land tenure is important to the development process, but China's rural reforms have so far failed to provide farm households with this security. We examine the political economy of land tenure and find that local governments sacrifice tenure security in the interests of efficiency and...

This article explores the role of social capital created by social network membership in the small-firm sector in developing countries. Some empirical studies find that social capital hampers economic performance by creating market segmentation and inducing rent-seeking activities. Other studies...