The purpose of this paper is to investigate contract renegotiation in multi-agent situations where risk averse agents negotiate a contract offer to the principal after they observed a common, unverifiable perfect signal about their actions. Renegotiation gives the agents gains from mutual insurance.

The purpose of this paper is to investigate contract renegotiation in multi-agent situations where risk averse agents negotiate a contract offer to the principal after they observed a common, unverifiable perfect signal about their actions. Renegotiation gives the agents gains from mutual insurance.

The purpose of the paper is to investigate how side track (or collusion) among agents affects the principal's welfare in a hidden action model. We assume that the agent's actions are mutually observable but not contradictable among them and hence direct coordination of actions via side...

The purpose of the paper is to investigate how side track (or collusion) among agents affects the principal's welfare in a hidden action model. We assume that the agent's actions are mutually observable but not contradictable among them and hence direct coordination of actions via side...

We study internal organization of a firm that comprises a CEO and two division managers. The two key ingredients of our model are externalities among divisions' projects that may require coordination and effort incentives for the CEO and the two division managers. Depending on how decision...

This paper investigates what legal rules for breach of contracts can support the efficiency in a principal-agent relationship when complete contracts cannot be written ex ante and the agent chooses unobservable effort in advance of trade. We examine both specific performance and expectation...

In this paper, we present a dynamic general equilibrium model to investigate how different contracting modes based on formal and relational enforcements endogenously emerge and are dynamically linked with the process of economic development. Formal contracts are enforced by third-party...

In this paper we investigate the principal-multi agent relationship with moral hazard where a risk neutral principal contracts with multiple risk averse agents whose actions are unobservable to the principal. We show that the well--known trade--off between incentive and risk sharing can be...

This paper studies internal organization of a firm using an incomplete contracting approach `a la Grossman-Hart-Moore and Aghion-Tirole. The two key ingredients of our model are externalities among tasks that require coordination, and investment in task-specific human capital. We compare three...