We combine the traditions of Coase and Adam Smith to look for the most efficient mechanisms in situations where buyers need sequences of human asset services, but only know their sequence one step ahead. The environment has two critical features: (a) multilateral matching allows gains from...

We identify conditions under which a bargainer makes inefficiently large (small) investments in search for information about the opponent's reservation price. The analysis starts with the observation that a player will invest too much (too little) if the opponent's expected payoff is decreasing...

We look at the economic functions of firms, contracts, and markets and characterize the optimal scope of the firm. Governance structures appear as equilibria and are compared in terms of production costs - determined by a tradeoff between standardization and adaptation - and adjustment costs –...

Firms can be analyzed from the resource or product aspect. This paper develops simple economic tools for analyzing a firm's resource position, and uses a resource product matrix to examine some strategic options suggested by the resource-based view. The resource-based view provides basis for...

We study the division of labor within an industry, formulate it as a generalized make-or-buy problem, and characterize the optimal allocation of work as that minimizing the sum of adjustment-costs within and between firms. Using a unique dataset on eight segments of the global automobile...

The parties to a contract typically make a lot of decisions during the time it is in force, and the paper is based on the premise that it takes time to be involved in any one of these decisions. Attempts to economize on decision-making time then imply that the parties may write a contract in...

We look at a principal-agent model in which the agent has to perform an action, the difficulty of which is better known ex interim than ex ante. We compare two contracting regimes; one with commitment to an ex ante negotiated contract, and one with an ex interim negotiated contract. The ex ante...

In order to push a customer and market orientation deep into the organization many firms have adopted systems by which internal customers rate internal suppliers on some measure-- often satisfaction. The internal supplier receives a larger reward for a higher rating. We examine incentive systems...