As digital technologies increase the occurrence of big bang disruptions across industries, companies old and new find they have less time both to profit from their own disruptor and to unleash the next one. This article describes the drivers of this phenomenon, and offers strategic responses...

Under information asymmetry, lemons tend to be overpriced. Yet, how much overpricing premium the lemons can command is contingent on the underlying legal institutions. A set of transaction data from Hong Kong's housing market reveals that durable lemons are overpriced by 6.7% and 9.9% under the...

We formulate and solve the problem of optimal mechanism-design by a principal facing adverse selection and moral hazard from different sources. The parties' decision problem is comprised of a publicly observable collective choice and a partially private social choice. As in agency with pure...

Private firms often withhold information or contest scientific knowledge when public revelation could lead to costly regulations or liability. This concealment leads to negative externalities and public harm. But what if private firms' superior knowledge and self-interest could be harnessed to...

This paper presented the core part of the then newly-developed theory of agency, which had been independently proposed by Stephen Ross and Barry Mitnick. The paper described a typology of agency relationships based on the nature of the consent between agent and principal, the source of...

This paper examines the optimal provision of incentives for contract designers. A principal hires an agent to draft a contract that is incomplete because the ex-ante specified design might not be appropriate ex-post. The degree of contract incompleteness is endogenously determined by the effort...

Although the pure economic loss rule has been remarkably durable in the common law, it suffers from a theoretical deficit. The rule has not been properly framed within the broader context of Anglo-American political economy. Any theory must recognize that the rule fundamentally deals with...

This paper analyzes the relations between knowledge, control and organizational structure both in the market system as a whole and in private organizations. Limitations on the mental capacity of the human mind and the costs of producing and transferring knowledge means that knowledge relevant to...

The nature of disruptive innovation, first studied by Joseph Schumpeter, has changed dramatically in the wake of rapidly and predictably deflating costs for embedded digital technology. New disruptors now enter the marker both better and cheaper than existing products. The result is devastating...

We analyze delegation of a set of decisions over time by an informed principal to a potentially biased agent. Each period the principal observes a state of the world and sends a “cheap-talk” message to the agent, who is privately informed about her bias. We focus on principal-optimal...