We treat information acquisition by potential investors in initial public offerings as endogenous. With endogenous information, the critical question is why underwriters would allow investors to spend resources acquiring superior information intended solely to effect a wealth transfer. We show...

Collaboration among people is often subject to shirking; the net gain from collaboration depends on the contract governing it. The author argues that the entrepreneur assumes the role of residual claimant because his actions are more costly to monitor than those of the factors with which he...

In this paper the author suggests that besides Frank Knight's well recognized "uncertainty" explanation of the firm, he had another one. "Moral hazard" is the central feature in the second, largely overlooked theory. The author argues, and attempts to document, that this theory is not a chance...