The canonical selection contracting programme takes the agent's participation decision as deterministic and finds the optimal contract, typically satisfying this constraint for the worst type. Upon weakening this assumption of known reservation values by introducing independent randomness into...

The authors present a new methodology for studying the problem of intrafirm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment. They develop and analyze a general noncooperative multilateral bargaining framework between the firm and its...