Mismatches typically arise because of information problems in markets. This paper discusses the possibility of mismatching in partnerships focussing on strategic mismatches that cannot be explained by information problems. It is shown that due to market competition sometimes players can profit...

everal empirical findings have challenged the traditional trade-off between risk and incentives. By combining risk aversion and limited liability in a standard principal-agent model the empirical puzzle on the positive relationship between risk and incentives can be explained.

In a multi-agent setting, individuals often compare own performance with that of their peers. These comparisons in?uence agents? incentives and lead to a noncooperative game, even if the agents have to complete independent tasks. I show that depending on the interplay of the peer effects,...

We consider a two-stage principal-agent model with limited liability in which a CEO is employed as agent to gather information about suitable merger targets and to manage the merged corporation in case of an acquisition. Our results show that the CEO systematically recommends targets with low...

The paper analyzes how the choice of organizational structure leads to the best compromise between controlling behavior based on authority rights and minimizing costs for implementing high efforts. Concentrated delegation and hierarchical delegation turn out to be never an optimal compromise. If...

Owners usually want their managers to maximize profits. As the literature on strategic delegation has shown it may be beneficial to owners to put a positive weight on sales in the optimal linear incentive scheme for managers to make them behave more aggressively in the market. This paper shows...

We analyze the optimal choice of risk in a two-stage tournament game between two players that have different concave utility functions. At the first stage, both players simultaneously choose risk. At the second stage, both observe overall risk and simultaneously decide on effort or investment....

We discuss a principal-agent model in which the principal has the opportunity to include a noncompete agreement in the employment contract. We show that not imposing such an agreement can be beneficial for the principal, as the possibility to leave the firm generates implicit incentives for the...

Participants of dynamic contests sometimes play with the rules of the game by withholding effort in the beginning. Such behavior is referred to as sandbagging. I consider a two-period contest between heterogeneous players and analyze potential sandbagging of high-ability participants in period...

The author discusses the optimal sharing of broadcasting revenues given a central marketing system. A league's sports association wants to maximize the joint profits of the sports clubs' owners. The results show that a winner-take-all scheme should be used if the teams are homogeneous. However,...