We model an organization as a hierarchy of managers erected on top of a technology (here consisting of a collection of plants). In our framework, the role of a manager is to take steps to reduce the adverse consequences of shocks that affect the plants beneath him. We argue that different...

Because of the inherent uncertainty, promotion of innovation critically depends on screening mechanisms to select projects. This paper studies the relationship between bureaucracy and financial constraints as two such mechanisms. The lack of commitment to hard financial constraints interferes...

This paper studies incentives and loss of control in a hierarchy model that combines and generalizes the models of Williamson, Calvo-Wellisz and Keren-Levhari. The levels of effort from managers and workers, the wage scales, the span of control, and the total number of tiers are all endogenous....

The revenue-equivalence theorm for auctions predicts that expected seller revenue is independent of the bidding rules, as long as equilibrium has the properties that the buyer with the highest reservation price wins and any buyer with the lowest possible reservation price has zero expected...

This paper characterizes the choice rules that can be implemented when agents are unable to commit themselves not to renegotiate the mechanism. Copyright 1999 by The Review of Economic Studies Limited.

The authors scrutinize the conceptual framework commonly used in the incomplete contract literature. This literature usually assumes that contractual incompleteness is due to the transaction costs of describing--or of even foreseeing--the possible states of nature in advance. They argue,...