This paper provides a first study of the optimal design of active monitors' exit options in a problem involving a demand for liquidity and costly monitoring of the issuer. Optimal incentives to monitor the issuer may involve restricting the monitor's right to sell her claims on the firm's...

This paper develops a theory of the allocation of formal and real authority within organizations. Real authority is determined by the structure of information, which in turn depends on the allocation of formal authority. An increase in an agent's real authority promotes initiative but results in...

This paper analyzes the organization of the R&D activity in an incomplete contract framework. It provides theoretical foundations to understand how the allocation of property rights on innovations may affect both the frequency and the magnitude of these innovations; to rationalize commonly...