This paper provides a rationale for equal sharing in heterogeneous partnerships. We introduce project choice and information sharing to a standard team production setting. A team with two agents can choose whether they want to work on a status quo project or on an alternative project. If the...

The allocation of control rights is a key issue in incomplete contracts. In this paper, we add an exit option, the right of early termination, to the standard agency model for employment contracts. We address two questions: (1) Who should have this right? (2) What is the effect of its inclusion...

A manager's compensation contract and the level of resources available to him jointly influence his incentives to acquire information about different investment alternatives as well as his resource allocate decisions. We show that the optimal compensation contract induces investment allocations...

For the classic agency model (Holmström, 1979), under different assumptions, we offer a completely different solution than the standard solution in the literature. Our optimal contract has a closed form, offers a contingent fixed payment, and is efficient. In contrast, the standard contract in...

One major difficulty with the standard agency model is that it generally does not provide a closed-form solution. A second major difficulty is that the theory relies on the troublesome first-order approach. To avoid these difficulties but at the same time to allow a general utility function,...

This paper examines the issue of international development partnerships among NGOs in the context of a principle-agent framework. Specifically, we characterize the ability of shared religious values in development partnerships to mitigate agency problems. These advantages are weighed against...

This paper invesigates the optimal compensation scheme for workers in a team who value not only absolute but also relative incomes. A worker is said to be more ambitious if his utility places more weight on relative income. In this case the firm can exploit the worker's preference for relative...

The scientific environment might influence university researchers’ job designs. In a principal–agent model, researchers must choose between substitutable tasks, publishing or teaching, according to their individual abilities and the scientific and pedagogical context that exists in their...

This paper addresses the class of agency problems with a risk-neutral principal and a risk-averse agent where hidden action and hidden information (on the agent's efficiency) are jointly present. The commonly used technological assumptions - such as the monotone-likelihood-ratio property (MLRP)...