By introducing asymmetric information of investors' abilities and finitely repeated games into the classic hold-up model, this paper revisits the relationship between property rights and reputation under incomplete contracting environment and obtains some different insights. First, even facing...

Business networks are a feature of the organizational landscape of many countries, though they vary in magnitude. This paper develops a theory of business networks where they are endogenous to the reliability of the legal system. Networks are a substitute for reliable institutional support that...

This paper analyzes the allocation of decision-making authority when the principal has reputation concerns. The principal can either keep the authority, or delegate the authority to the agent, who has better information. An outside evaluator cannot observe who makes the decision. Thus, the...

This paper formulates a positive model that predicts when parties will employ private ordering to enforce their agreements. The typical enforcement mechanism associated with private ordering is the reputation mechanism, when a merchant community punishes parties in breach of contract by denying...

Because corruption must be hidden from the public and is not enforced by courts it entails transaction costs, which are larger than those from legal exchange. This suggests that corrupt contracts are primarily relational contracts where legal exchange serves as a basis for sealing and enforcing...

This paper studies the interaction of information disclosure and reputational concerns in certification markets. We argue that by revealing less precise information a certifier reduces the threat of capture. Opaque disclosure rules may reduce profits but also constrain feasible bribes. For large...

Syndication, which is a joint realization of one project/one investment by several capital providers, is a long existing phenomenon that plays a central role in many financial market segments. Within this paper we develop a theoretical model focusing on the dynamic aspect of syndication, namely...

How do markets spread risk when events are unknown or unknowable and where not anticipated in an insurance contract? While the policyholder can 'hold up' the insurer for extra contractual payments, the continuing gains from trade on a single contract are often too small to yield useful coverage....

We address the question how much authority a principal should delegate to a manager with conflicting interests and uncertain ability in a context in which the manager has both compensationbased and reputational incentives. The optimal level of authority balances the value of the manager's...

Is the reputation of a firm tradable when the change in ownership is observable? We consider a competitive market in which a share of owners must retire in each period. New owners bid for the firms that are for sale. Customers learn the owner's type, which reflects the quality of the good or...