Agents make decisions by trading off cost, return and risk. The literature, however, does not consider the impact of risk on action choice. We show that this tradeoff has important implications for the firm. First, the firm may provide no insurance in the salary. Since the agent’s action...

This article provides evidence on the determinants of the compensation arrangements used in franchise relationships. While the empirical literature has studied two of these compensation arrangements – the royalty rate and the up-front franchise fee – this work expands the analysis to another...

This paper reports the results of an individual real effort laboratory experiment where subjects are paid for measured performance. Measured performance equals actual performance plus noise. We compare a stable environment where the noise is small with a volatile environment where the noise is...

Most contracts that individuals enter into are not written from scratch; rather, they depend upon forms and terms that have been successful in the past. In this paper, we study the structure of form construction contracts published by the American Institute of Architects (AIA). We show that...

Recent debates about the problem-solving capacity of supranational governance within the EU form the background of this paper, which explores the causal conditions for correct and timely transposition of EU directives. In this context, some scholars have pointed to the degree of fit or misfit...

Purpose of this paper. The purpose of this paper is to provide new evidence on the issue of the effect on public enterprises economic performance of the introduction of some given changes in organisational status and management practices, while keeping the enterprises under public control....

This work aims at connecting developments in the theory of agency and implicit contracts with research on bounded rationality and agent based computational models. These are two related areas as implicit contracts are justified on the basis of bounded rationality, which additionally is one of...

Corporate scandals, reflected in excessive management compensation and fraudulent accounts, cause considerable damage. Agency theory?s insistence on linking the compensation of managers and directors as closely as possible to firm performance is a major reason for these scandals. They cannot be...