The fiduciary norm, which prescribes agent behavior solely for the goal of the principal, without regard for other goals, is defined in the context of the theory of agency. The fiduciary program, a set of procedures for determining the principal's preferences and acting for them, is then defined...

Recent theoretical work on agricultural contracts has utilized agency theory. Most of this work considers a moral hazard problem, and assumes that producers are homogeneous, so that there is no adverse selection problem. We utilize a sample of producer performance under a broiler production...

Drawing inspiration from American institutionalism and new institutional economics, this paper discusses the rise of large corporate farms as the transition from the classic capitalist firm to the corporate form of organization based on the separation of ownership and control. Three case studies...

This paper argues that academics, politicians, and the media have six commonly held but misguided beliefs about corporate governance. While Armstrong, Guay, and Weber (2010) discuss some of these misconceptions, a wider recognition that these beliefs are actually “myths” is important. They...

In this paper, a formal rent-seeking theory of the firm is developed. The main idea is that integration (compared to non-integration) facilitates rent-seeking for the integrating party, but makes it harder for the integrated one. In a one-period model, this implies that the rent-seeking contest...

One recurring theme that emerges from empirical studies on franchising is the coexistence of franchised and company-owned units within the same chain. This paper supports the idea that mixed chains or dual distributions are efficient organizations when both the behavior of managers and the...

We consider a relational contracting model in which the parties choose to allocate authority either to the principal (centralization) or to the agent (delegation). The party who has authority chooses a project, and the agent exerts effort to successfully execute the project. Delegation generates...

Motivated by challenges facing IT procurement, this paper studies a hybrid procurement model where a reverse auction of a fixed-price IT outsourcing contract may be followed by renegotiation to extend the contract's scope. In this model, the buyer balances the need to incentivize...

The 'ratchet effect' refers to a situation where a principal uses private information that is revealed by an agent's early actions to the agent's later disadvantage, in a context where binding multi-period contracts are not enforceable. In a simple, context-rich environment, we experimentally...

This paper studies a partial-contracting model where an agent may provide effort to increase a project's scope before some later decisions have to be taken. Consistent with existing empirical evidence, we find a positive relationship between exogenous risk and delegation. That is, we show that...