A client has a problem, but does not know whether it is serious or minor. She consults an expert who can correctly diagnose and fix her problem. This paper characterizes the equilibrium pricing and recommendation strategies of an expert under the assumptions that i) the type of treatment is...

Agency theory predicts a negative relationship between risk and incentives, yet recent empirical evidence has not consistently found such a relationship. In fact, some researchers have found a positive relationship. By introducing competition for heterogeneous managers, who differ in their...