The use of equity-based compensation is an increasingly popular means by which to align the incentives of top management with that of the shareholders. However, recent theoretical and empirical research suggests that the use of equity-based compensation has the unintended consequence of creating...

When attorney effort is not verifiable, previous theoretical work has found that a competitive legal services market may yield an equilibrium contingent fee that is strictly greater than the zero-profit contingent fee. However, these results require fairly sophisticated consumers who recognize...

Production requiring licensing groups of complementary patents implements a coordination game among patent holders, who can price patents by choosing among combinations of fixed and royalty fees. Summed across patents, these fees become the total producer cost of the package of patents....

A common mechanism to elicit risk preferences requires a respondent to make a series of dichotomous choices. A recurring problem with this mechanism is a frequently observed tendency to switch from the less to the more risky choice multiple times, multiple switching behaviour. We introduce an...

Other-regarding preferences have been documented in many strategic settings. We provide a model in which the managers of firms in an oligopoly have preferences for both consumer welfare and own income. We find that profit sharing can function as a facilitating practice. Managers must receive a...

This paper considers the efficient siting of a noxious facility that causes environmental damages (for example, increased pollution) in the host community. The analysis shows that there can be multiple efficient locations without transfers, and that an efficient location need not have the...

In theory, contingent fees can reduce the effects of informational asymmetries by allowing clients to screen low-quality attorneys who obtain smaller awards in expectation. We experimentally examine whether clients possess the sophistication necessary to design screening contracts and how...