It is well known that there are infinitely many incentive contracts that achieve the full information outcome in the standard agency model when the agent is risk-neutral. However, since Harris and Raviv (1979), the fixed-rent contract has been the focal point among those infinitely many...

Linear contracts are of particular interest to economists. They have a simple structure, yet they are very popular in practice. In this regard, plaintiff-lawyer contractual relationships are of particular interest. Lawyers' fees are mostly paid by a sharing rule and they are typically a fixed...

This paper is a contribution to the ongoing debate on the benefits and drawbacks of bank revenue diversification. Revenue diversification may benefit banks if diversified activities are inherently less risky and possess high returns, while it may hurt banks if diversified activities are more...

Most privatizations around the world take the form of staged privatization with multistage lockups and step-by-step unlocking of shares. A lockup prevents the shares of a company from being sold to the public for a specified or unspecified period of time. This paper presents a theory and...

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...

In recent years, governments have been increasingly adopting Build-Operate-Transfer (BOT) contracts for large infrastructure projects. However, BOT contracts have received little attention from economists. The apparent agency problem in BOT projects has never been analyzed. In this paper, we...