This paper analyses bargaining over an incentive compatible contract in a moral hazard framework. We introduce the Kalai-Smorodinsky bargaining solution and compare the outcome with the commonly applied Nash solution. Whether worker's effort is higher in the Nash or the Kalai-Smorodinsky...

We analyze the countervailing incentives that mid-level appellate judges face when deciding whether to remand a case back to the lower court. Although appellate courts' ability to remand cases can mitigate moral hazard problems, by restraining trial court judges, it may sometimes instead...

We study how informal buyer-supplier relationships in the German automotive industry affect procurement. Using unique data from a survey focusing on these, we show that more trust, the belief that the trading partner acts to maintain the mutual relationship, is associated with both higher...