The aim of this paper is to provide an explanation of recent corporate malpractices in terms of individuals' norm-based behavior. In particular, it is suggested that corporate misbehavior could be explained as a system-wide failure grounded in the logic of how the market itself operates and in...

In a “Hayekian world,” the market is a competitive exchange network that continuously solves a coordination problem. In this competitive context, expectations are endogenous, so planned actions are assumed to be mostly realizable. Nevertheless, economic crises are possible: not even...

This paper discusses the use of informal channels in hiring processes in terms of a standard principal-agent model. We have developed an adverse selection model of the labor market where effort is not contractible and employers have the opportunity to use their group of friends to hire workers....

The common sensical definition of favoritism implies some kind of discrimination. We propose a model where a group of agents commit to give preference to their members when making job offers. This endogamic behavior is advantageous because members enjoy preferential job offers, but they incur in...