This paper considers a principal-agent model with adverse selection and limited wage discrimination. Under wage compression, an agent may have an incentive to free ride on other agents by manipulating his private information. When collusion among the agents is not possible, the principal...

We explain why organizations that limit the voice of their agents can benefit from granting them an exit option. We study a hierarchy with a principal, a productive supervisor and an agent. Communication is imperfect in that only the supervisor can communicate with the principal, while the agent...

This paper considers an agency model in which the principal is privately informed of her production technology. In our model, the principal can require the agent to adopt the principal's technology for production, or alternatively, to adopt a technology in the market. Information about the...

We study the optimal hierarchical structure of an organization under limited commitment. The organization cannot make a long term commitment to wages and output levels, while it can commit to its hierarchical structure. We show that the optimal hierarchical structure is horizontal when it is...

We explain why organizations that limit the voice of their agents can benefit from granting them an exit option. We study a hierarchy with a principal, a productive supervisor and an agent. Communication is imperfect in that only the supervisor can communicate with the principal, while the agent...

This paper considers an agency contracting with multiple tasks. The agent is privately informed on some tasks, but he must gather information on the other. We show that depending on the cost to gather information, task assignment is employed as an instrument to induce information gathering, or...

"Integrating planning and implementation, by having one agent perform both tasks, may be effective in encouraging planning activity whose outcome is not observable. Emphasizing its information-generating role, we find that planning activity is best encouraged by partially integrating the tasks....