We analyze a search model of the labor market in which firms and workers meet bilaterally and negotiate over wages in the presence of private information. We show that a fall in labor market frictions induces more aggressive wage bargaining behavior which in turn leads to a costly increase in...

We analyze a search model of the labor market in which firms and workers meet bilaterally and negotiate over wages in the presence of private information. We show that a fall in labor market frictions induces more aggressive wage bargaining behavior which in turn leads to a costly increase in...

This paper studies delegation as an alternative for communication. We show how a principal may give up control rights in order to foster the efficient use of information present in an organization. We point out how the benefits of delegation vary with the congruence between agent and principal,...