This paper studies a monopsonistic firm's optimal employment contracts if workers have private information on both their propensity for social comparisons and their ability. Employees of the firm are taken to form their own distinct reference group. It is shown that screening workers with equal...

We consider an entrepreneur that is the sole producer of a cost reducing skill, but the entrepreneur that hires a team to use the skill cannot prevent collusive trade for the innovation-related knowledge between employees and competitors. We show that there are two types of diffusion-avoiding...

We analyze the offering, asking, and granting of help or other benefits as a three-stage game with bilateral private information between a person in need of help and a potential help-giver. Asking entails the risk of rejection, which can be painful: since unawareness of the need can no longer be...

This paper contrasts the smooth distribution of vaccinations for the annual flu against the contentious and clumsy distribution for vaccinations against Covid-19. I use this comparison to gain insight into the properties of markets and politics as vehicles for organizing human activity. The...

This paper uses a mechanism design without transfer approach to investigate the optimal communication mechanism in a two-division organization. The principal, with perfect commitment power on multiple decision rules, wants decisions to be both adapted to local conditions and coordinated with...

This paper examines the effectiveness of cheap talk when the receiver is imperfectly informed. We show that the receiver’s prior knowledge becomes an impediment to efficient communication in a model with the discrete state space: in general, the more the receiver is informed, the less...

We study the economic consequences of opportunities for dishonesty in an environment where efficiency relevant behaviour is not contractible, but rather incentivized by informal agreements in an ongoing relationship. We document the repeated interaction between a principal and an agent who,...

We theoretically and experimentally analyze the role of verifiability and privacy in strategic performance feedback using a “one principal-two agent” context with real effort. We confirm the theoretical prediction that information transmission occurs only in verifiable feedbackmechanisms and...

FeedbackWe theoretically and experimentally analyze public and private feedback in teams that are characterized by different performance technologies. We consider a setting where the principal can provide truthful information on agents’ performances or strategically withhold feedback. We find...