In a two-agent setting, one agent ("landlord") seeks to maximize his residual gain, i.e., that part of output remaining after payment of a reward to the other agent ("worker"). The reward must be a function of the worker's output since his effort cannot be directly observed, and the landlord...

Three aspects of bounded rationality seem important for decision theory: (1) the existence of goals, (2) the search for improvement, and (3) long-run success. Two important criteria of long-run success are (a) the probability of survival, and (b) the long-run average rate of growth of...

This note, which was stimulated by Ekern and Wilson's study of the theory of the firm in an economy with incomplete markets, gives conditions for ex ante and ex post stockholders to be unanimous in their respective preferences among alternative production plans. This modest extension of Ekern...