This paper is concerned with the persistence of inefficient institutions. Why are they not replaced by more effcient ones? What and/or who prevents such change? We provide an answer to these questions based on two key ideas. The principal idea is that institutional change on an issue may...

This paper investigates the impact of program budget size on monitoring and competitive bidding in the public sector. A sequential game is developed involving a ministry and bureau strategically interacting in the provision of a public sector good. The ministry copes with imperfect information...

In this paper the impact of budget size on a government's choice to centralize or decentralize the budgetary process is investigated using asymmetric information, differing preferences, and endogenous budgetary arrangements. The central government chooses between a budgetary process that...

This paper investigates the pricing decisions of foreign manufacturers in international markets within a bargaining framework with asymmetric information and the rental of goodwill. The key findings are: first, the foreign manufacturer follows a mark-up pricing strategy in which its gross margin...

This study investigates a government's contracting decision to audit or outsource the provision of a public good given a potential hidden bribe and information asymmetries. The key findings are the following. First, the bribe and price of the public good are increasing in the corruptibility of...

We use a two-issue bargaining model with asymmetric information to study agent choice of how to structure bargaining. We uncover the settings in which different agenda structures are chosen in equilibrium, how the order in which issues are bargained over matters, and what impact the rules for...