This paper studies the choice of organizational form under incomplete contracts. We identify an organizational form with a rule of ex-post bargaining and compare four types of organization: horizontal organizations, inverted pyramidal hierarchies, pyramidal hierarchies and vertical hierarchies....

This paper examines the trade-off between job assignments and incentives for specific investments. Under an incomplete contract, employees tend to underinvest in firm-specific human capital. To defuse this hold-up problem, the employer chooses an inefficiently low promotion standard. This result...

This note examines a noncooperative bargaining game model to implement the "equal split" solution in a transferable utility coalitional form game provided by Hart and Mas-Colell [Hart, S., Mas-Colell, A., 1996. Bargaining and value. Econometrica 64, 357-380]. We first clarify the relationship...