Agents in a hierarchy are commonly delegated authority to communicate and contract with agents at lower levels. While delegation reduces the burden of communication and information processing on the principal, it also introduces additional incentive problems. We find that with sufficient...

Consider a setting commonly found in intrafirm, regulatory, and political relationships wherein an uninformed decision maker, attempting to elicit information from an informed party affected by his decision, is unable to use transfers. This article examines whether both parties will agree on the...

One way for multinationals to manage their exposures to foreign currency fluctuations is by matching the currencies of costs and revenues, a practice sometimes referred to as "natural hedging." Proponents of this risk-management technique argue that matching currencies decreases profit...