To generate downstream sales, manufacturers often spend both effort and compensation when working with their dealers. Existing theories are inconclusive about the interdependent role of the two kinds of instruments in motivating dealer effort; that is, whether they are substitutes or...

A manager's compensation contract and the level of resources available to him jointly influence his incentives to acquire information about different investment alternatives as well as his resource allocate decisions. We show that the optimal compensation contract induces investment allocations...

I analyze a problem of project selection where two agents, privately informed of both the true value and their bias in favor of their projects, make non-verifiable proposals to an uninformed decision-maker. The analysis makes two contributions. First, I examine the consequences of preference...

An uninformed principal elicits soft information from privately informed agents regarding the quality of their projects, and may then further investigate their proposals. The principal's ability to acquire further information crowds out soft information, and may even worsen organizational...

I investigate the impact of environmental volatility and the cost of information on the preferred organizational structure, as determined by the allocation of decision rights, the compensation structure of the managers and the degree of operational integration (such as the use of shared...

I analyze the impact of managerial involvement and the allocation of authority on employee initiative in a setting where both a manager and an employee can come up with new ideas for implementation. Extending the analysis of Aghion and Tirole (1997), the model introduces two effects that are...

We use a simple agency model to clarify and characterize the various avenues through which changes in the level of uncertainty impact the optimal strength of linear incentives. Instead of attempting to characterize different "types" of uncertainty, which has been the approach in the literature...

Agents need to be motivated to develop ideas and to share information regarding their potential value. When the principal needs to rely on the agents' claims when choosing between the alternatives, she needs to decide how conflict between the alternatives is resolved. This resolution can be...