Both bribery and extortion weaken the power of incentives, but there is a trade-off in fighting the two because rewards to prevent supervisors from accepting bribes create incentives for extortion. Which is the worse evil? A fear of inducing extortion may make it optimal to tolerate bribery, but...

This study examines the effect of loss aversion on the reservation value of a house seller. Contrary to the finding of a prior theoretical study by Buisson (2016), we show that loss aversion can increase the reservation value as hypothesized in many empirical literatures. Loss aversion makes the...

This paper studies the optimal structure of spectrum charges under the information asymmetry between the government and firms, extending the model of Yoon and Lee (2005). In our model, the government assigns the spectrum to the firms in the first stage during which the demand is not realized yet...

This paper provides a rationale for why an organization often generates a bias in favor of a new project even after learning that its profitability will be certainly below more conventional ones. We analyze a principal-agent model with two alternative projects, one of which is to be chosen by...

In a principal-agent framework, we explain different managing styles. In our model, there are two vertical tasks -- an upstream task for improving the project's potential environment, and a downstream task for implementing the project. The downstream task must be done by the worker, but the...

We study contracting between a public good provider and users with private valuations of the good. We show that, once the provider extracts the users' private information, she benefits from manipulating the collective information received from all users when communicating with them. We derive...

We analyze an oligopolistic competition with differentiated products and qualities. The quality of a product is not known to consumers. Each firm can make an imperfect disclosure of its product quality before engaging in price-signaling competition. There are two regimes for separating...