Tripartite contracts between workers, a firm, and an insurance broker Pareto dominate the usual bilateral arrangements if coalitions are not feasible. They do this by allowing the broker to run surpluses over a reservation expected utility in some states and deficits in others. We show that...

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In this study we identify necessary and sufficient conditions for sufficient statistics to strictly (Pareto) dominate all nonsufficient statistics as information for contracting in agencies with moral hazard. We first observe that strict dominance requires that an optimal compensation scheme...

We investigate how the possibility of subsequently subcontracting production to each other influences rivals' initial competition for a contract or a market as a two-stage game. In its first stage, the two firms engage in price competition to supply a contract or a market. In the second stage,...

This article examines the implications of the learning curve in a world of uncertainty. We consider a competitive firm whose costs decline with cumulative output. Because the price of the firm's output evolves stochastically, future production and cumulative output are unknown and are contingent...

In this article we study the value of delegating authority over income tax audit policy, arising from the incompleteness of contracts. Consider a utilitarian government whose ability to commit is limited to aggregate dimensions of its audit policy, as publicly verifiable information about...

Systematic empirical evidence has heretofore been lacking on the extent to which supplier opportunism at the time of contract renewal is a fundamental problem associated with franchise bidding schemes. At least for the case of local cable television distribution, this article suggests several...

This article explores the effects of workers' compensation on fatality rates and wages using the 1982 Panel Study of Income Dynamics and the new occupational fatality data issued by the National Institute for Occupational Safety and Health. The fatality rate depends upon the workers'...

A model of a firm with one principal and two agents is considered. The actions of the agents are not observed by the principal; hence there is moral hazard. It is shown that when the agents act sequentially -- that is, agent 2 takes his action conditional upon agent 1's choice -- the first-best...

This article examines the experience in the United Kingdom with the regulation of privatized monopolies. Its conclusions are (1) that there are significant differences between RPI - X (or price-cap) and U.S. rate-of-return regulation, which provides greater scope for bargaining in the former...