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This article explores the specific contribution of recent literature on incomplete contracts in comparison with the acontractual Walrasian general equilibrium as well as the complete optimal contracts of the Agency theory regarding the institutional identity of agents. It underlines a tension...
Persistent link: https://www.econbiz.de/10011111768
We reconsider the property rights approach to the theory of the firm based on incomplete contracts. We explore the implications of different degrees of relationship-specificity when there are two parties, A and B, who can make investments in physical capital (instead of human capital). If...
Persistent link: https://www.econbiz.de/10011112525
In the property rights approach to the theory of the firm (Hart, 1995), parties bargain about whether or not to collaborate after non-contractible investments have been made. Most contributions apply the regular Nash bargaining solution. We explore the implications of using the generalized Nash...
Persistent link: https://www.econbiz.de/10011113898
The government and a non-governmental organization (NGO) can invest in the provision of a public good. In an incomplete contracting framework, Besley and Ghatak (2001) have argued that the party who values the public good most should be the owner. We show that this conclusion relies on their...
Persistent link: https://www.econbiz.de/10011113909
Service adaptations, when there is changing demand or problems regarding the service provision, constitute a major issue in Public Private Partnerships (PPPs). So far, studies have explained the ex post adaptation problems by the distorted incentives for the private public-service provider to...
Persistent link: https://www.econbiz.de/10005059109
More than twenty years have elapsed since Oliver Hart's Fisher-Schultz lecture on the topic of incomplete contracts. Incomplete contract theory (ICT) has become a rigorous and widely used approach in dealing with various issues. It's applications include firm theory (hierarchies, ownership and...
Persistent link: https://www.econbiz.de/10008568631
I show how improper conditioning of beliefs can lead to under-contribution in public goods environments with interdependent values. I consider a simple model of a binary, excludable public good. In equilibrium, provision of the public good is good news about its value. Naive players who...
Persistent link: https://www.econbiz.de/10011109699
Individuals bring effort to a group to achieve a common objective. Group membership introduces a free riding incentive, reducing effort, as well as a social responsibility incentive, increasing effort. This paper shows that the free riding effect is stronger. Individuals significantly reduce...
Persistent link: https://www.econbiz.de/10009328141
Quantum strategies have been successfully applied in game theory for years. However, as a reverse problem of game theory, the theory of mechanism design is ignored by physicists. In this paper, we generalize the classical theory of mechanism design to a quantum domain and obtain two results: 1)...
Persistent link: https://www.econbiz.de/10008529269
In the field of mechanism design, the revelation principle has been known for decades. Myerson, Mas-Colell, Whinston and Green gave formal proofs of the revelation principle. However, in this paper, we argue that there are serious bugs hidden in their proofs.
Persistent link: https://www.econbiz.de/10008531910