This study investigates the effect of a principal's choice on the availability of discretionary controls, where discretionary controls are defined as those not supported by enforceable explicit contracts. In contrast to prior findings on explicit controls, we find that agent reciprocity is not...

We examine the effect of endogenous contract selection on budgetary slack using two slack-inducing contracts found in the literature: a trust contract where the superior must accept the subordinate’s budget and a discretion contract where the superior can accept or reject the budget. Because...

We examine how decision makers adjust their allocation decisions in risky environments, and how organizational context influences these decisions. Superiors often have discretion over bonus allocations, allowing them to make adjustments for the risk faced by agents. It is thus important to...

In this study, we experimentally investigate how performance risk and relational risk affect a principal's willingness to offer gift, bonus, or penalty contracts and the subsequent motivational effect that these three contracts have on agents. Prior literature has not directly compared...

While managers commonly possess private information regarding future production cost when developing their cost budget, they also face outcome uncertainty regarding that future cost. This outcome uncertainty, however, has largely been ignored by experimental researchers examining various...