Empirical findings show that firms frequently employ overeducated workers. Since overeducated workers earn more than adequately educated ones working in similar jobs these findings seem to be puzzling. In this paper, we introduce an insurance approach to explain the employment of overeducated...

Agency theory emphasizes that separating ownership and control can lead to inefficiencies in corporations, but the literature on strategic delegation points out that the owner will profit from this separation due to advantages from self-commitment. In this paper, both literatures are combined....

Owners usually induce their managers to maximize profits instead of sales. This paper shows that in the context of strategic interactions between managers on markets which can be characterized as contests, owners may make their managers maximize sales

Rank-order tournaments are usually modeled simultaneously. However, real tournaments are often sequentially. We show that agents' strategic behavior significantly differs in sequential tournaments compared to simultaneous tournaments. In a sequential tournament, under certain conditions the...