The parties to a contract typically make a lot of decisions during the time it is in force, and the paper is based on the premise that it takes time to be involved in any one of these decisions. Attempts to economize on decision-making time then imply that the parties may write a contract in...

We look at a principal-agent model in which the agent has to perform an action, the difficulty of which is better known ex interim than ex ante. We compare two contracting regimes; one with commitment to an ex ante negotiated contract, and one with an ex interim negotiated contract. The ex ante...

In order to push a customer and market orientation deep into the organization many firms have adopted systems by which internal customers rate internal suppliers on some measure-- often satisfaction. The internal supplier receives a larger reward for a higher rating. We examine incentive systems...

In the context of an employment relationship, I present an argument suggesting that it is more efficient for the boss to own productive assets. The idea is that a conflict between productivity and depreciation is internalized if the player deciding what an asset is used for also has residual...

The Resource-Based View of the firm (RBV) posits as a necessary condition for diversification that a firm's resources can be leveraged beyond its original business. To achieve sufficiency we need to know whether the resource is best leveraged inside the firm or through a market contract. We...

We use a dataset describing ownership of productive assets in the carpentry trade to evaluate several factors influencing the allocation of asset ownership among employers and employees. The findings suggest that the allocation involves a tradeoff between two incentive effects influencing how...