We use a principal-agent framework to reexamine the implications of the negligence and strict liability rules when the tort-feasor is an agency. We assume a unilateral care situation and consider both the cases of moral hazard and of adverse selection. In both instances the negligence rule is...

We provide sufficient conditions for the first-order approach in the principal-agent problem when the agent’s utility has the non-separable form u(y - c(a)) where y is the contractual payoff and c(a) is the money cost of effort. We first consider a decision-maker facing prospects which cost...

We use a principal-agent framework to reexamine the implications of the negligence and strict liability rules when the tortfeasor is an agency. (...)

Two firms produce a product with a horizontal and a vertical characteristic. We call the vertical characteristic quality. The difference in the quality levels determines how the firms share the market. Firms know the quality levels, consumers do not. Under non-comparative advertising a firm may...

We provide a condition for ranking of information systems in agencyproblems. The condition has a straightforward economic interpretation in terms of the sensitivity of a cumulative distribution with respect to the agents effort. The criterion is shown to be equivalent to the mean preserving...

We consider the effects on reward systems of workers concern withrelative pay by comparing the wage costs of providing incentives through groupversus individual bonus schemes. When workers have a propensity for envy, eitherscheme may be the least cost one depending on the workers outside...

We consider the cost of providing incentives through tournaments when workers are inequity averse and performance evaluation is costly.

This paper analyses whether liability insurance is socially desirable, under strict liability or under the negligence rule, when the injurer?s behavior is imperfectly observable. Liability insurance is known to be socially beneficial under the strict liability rule, even though it can reduce...

We study the problem of deterring undesirable behavior in a moral hazard framework with risk averse individuals, noisy information and costly sanctions. We find that, if sanctions are a pure loss, a utilitarian society should use a bang-bang penalty scheme satisfying the maximum penalty...