Agency research on capital budgeting has demonstrated that a principal can reduce information rents by contracting on several investment projects in aggregate rather than on each investment project individually. We investigate the robustness of this result in a model that facilitates comparative...

Research in budgeting suggests that subordinates may exhibit economically significant degrees of honesty, in spite of pecuniary incentives to do otherwise. This study continues the exploration of honesty in budgeting along two dimensions. First, unlike prior experiments, we measure the...

In participative budgeting settings, less informed superiors elicit information from privately informed subordinates. In these situations, subordinates' honesty preferences should substantially enhance the efficiency of the budgeting process. In fact, recent research on budgeting suggests that...

Two managers invest funds in either a division-specific or common project. Managers are privately informed of their own division-specific return ratio and issue forecasts to their partner. Experimental parameter values are chosen such that: (1) investment in the division-specific project...

We conduct an experiment on voluntary disclosure within a simple bargaining setting wherein a proposer must choose one of two possible offers and a responder chooses whether to reject or accept that offer. In one treatment the proposer has the option to disclose whether a fairer (more equal)...

We examine the effect of endogenous contract selection on budgetary slack using two slack-inducing contracts found in the literature: a trust contract where the superior must accept the subordinate’s budget and a discretion contract where the superior can accept or reject the budget. Because...

We use an experiment to investigate the efficacy of a non-binding budgetary announcement made by an owner in order to mitigate a management control problem induced by asymmetric information. The owner's announcement indicates how much funding she will provide for each possible cost report by the...

This study examines optimal task assignment and performance measurement under moral hazard in a two state setting where two agents are risk neutral and have limited liability. Both productive and incentive efficiency are affected by task assignment. The principal may assign to each agent either...

An experiment with three treatments is used to evaluate the social efficiency of budgeting protocols induced by other-regarding preferences. In disaggregated superiors receive three individual proposals in iterated fashion, and must decide whether to accept each project without knowledge of the...