This article reviews the contribution of Hart and Holmstrom, the 2016 Nobel Laureates in economics. Holmstrom's work on the principal-agent problem answered questions as to what should (and should not) be included in an incentive contract. His work helped explain the simple structure of...

We model the determinants of who makes decisions, the principal or an agent, when there are multiple decisions. Decision making takes effort and time; and, once implemented, the expected loss from a particular decision (or project) increases with the length of time since the last decision was...

We examine decentralization -- that is, the use of more than one decision maker -- in small- to medium-sized organizations, with a particular focus on family firms. Our estimation results suggest that larger firms decentralize more often, as do firms with newer owners, organizations with a...

Using a unique employee-establishment matched survey, we find a causal relationship between an individual employee's trust of management and the delegation of real authority. We utilize both fixed effects and instrumental variables to control for unobserved factors: establishment-level fixed...