We study the delegation problem between a principal and an agent, who not only has better information about the performance of the available actions but also has superior awareness of the set of actions that are actually feasible. The agent decides which of the available actions to reveal and...

As the decision-makers and implementers of a firm's financial strategy, executives play a critical role in cash holding activities, and their psychological characteristics have a major impact on cash holdings. This paper investigates the association between CEO organizational identification and...

We survey directors and investors on the objectives, constraints, and determinants of CEO pay. 67% of directors would sacrifice shareholder value to avoid controversy on CEO pay, implying they face significant constraints other than participation and incentive compatibility. These constraints...

We study mechanism design under endogenously incomplete commitment as it arises in contracting with escape clauses. An escape clause permits the agent to end a contractual relationship under specified circumstances, after which the principal can offer an ex-post contract. Escape clauses are...

Learning is crucial to organizational decision making but often needs to be delegated. We examine a dynamic delegation problem where a principal decides on a project with uncertain profitability. A biased agent, who is initially as uninformed as the principal, privately learns the profitability...

We analyze a model of moral hazard in local public services which could be efficiently managed by officials under local democratic accountability, but not by officials who are appointed by the ruler of a centralized autocracy. The ruler might prefer to retain an official who diverted resources...

Each period, a principal must assign one of two agents to a new task. Profit is stochastically higher when the agent is qualified for the task, but the principal cannot observe qualification. Her only decision is which of the two agents to assign, if any, given the public history of selections...

We study, theoretically and empirically, the effects of incentives on the self-selection and coordination of motivated agents to produce a social good. Agents join teams where they allocate effort to either generate individual monetary rewards (selfish effort) or contribute to the production of...

We study a principal--agent model. The parties are symmetrically informed at first; the principal then designs the process by which the agent learns his type and, concurrently, the screening mechanism. Because the agent can opt out of the mechanism ex post, it must leave him with nonnegative...

The paper studies the relevance of product heterogeneity for innovation dynamics using an agent-based model. The vantage point is a short a review on the empirical relevance of capability accumulation for innovation processes and an assessment of how these processes are modelled theoretically in...

To explore the propagation of undesirable policies in a form of populist extremism, we construct a social learning model featuring agency problems. Politicians in different countries sequentially implement a policy. Voters learn the incumbent politician's type and the desirable policy by...

In this paper, we investigate whether dynamic incentive schemes lead to a ratchet effect in a social dilemma. We test whether subjects strategically restrict their contribution levels at the beginning of a cumulative public goods game in order to avoid high obligations in the future and how this...

In the current scenario of increasing social inequality, the debate over the compensation received by directors and executives of large listed companies, and its justification, has intensified. Drawing on Agency Theory and Human Capital Theory, a multilevel analytical technique is used in this...

The relationship with customers has important implications for operating decisions as well as firm performance. One important aspect of the supplier-buyer relationship is the contract duration, and how this factor is likely to affect firm investments has been under-researched. This study aims to...

This paper studies how information control affects incentives for collusion and optimal organizational structures in principal-supervisor-agent relationships. I consider a model in which the principal designs the supervisor's signal on the productive agent's private information and the...

Today, public and private organizations have increasingly turned to management and leadership development, seeking to advance their respective organizations under the assumption that leadership development programmes (LDPs) enable participants to develop their leadership capacity. As such, this...

Agency may be exercised by different entities (e.g., individuals, firms, households). A given individual can form part of multiple agents (e.g., he may belong to a firm and a household). The set of agents that act in a given situation might not be common knowledge. We adapt the standard model of...

This study seeks to see the level of impacts that different corporate governance mechanisms has on financial performance of banks in Ethiopia. Explanatory research design was used in establishing the casual effect relationship between corporate governance variables and banks financial...

State-owned enterprises (SOE) are essentially extensions of the government and are therefore responsible for multi-task objectives. The incentive system for SOE managers consists of both monetary compensation and promotion within the bureaucratic system. Political promotion is key to...

This paper studies the revelation principle for mechanisms with limited commitment when agents have correlated persistent types over the infinite horizon. After characterizing necessary and sufficient conditions to construct a mechanism with same ex-ante payoffs and interim beliefs to all...

We run an online experiment with 408 nance professionals (money managers) and 550 subjects from the general population in Sweden (clients). We examine drivers of clients' delegation decisions, differences in decision-making quality between both groups, and professionals' ability to implement...

This paper proposes a mechanism design approach, capable of endogenizing a monopolist's choice between selling and renting in a non-anonymous durable goods setting with short-term commitment. Allowing for mechanisms that determine the good’s allocation not only at the beginning but also at the...

We investigate overlapping contests in multi-divisional organizations in which an individual's effort simultaneously determines the outcome of several contests on different hierarchical levels. We show that individuals in smaller units are advantaged in the grand (organization-wide) contest for...

We investigate overlapping contests in multi-divisional organizations in which an individual's effort simultaneously determines the outcome of several contests on different hierarchical levels. We show that individuals in smaller units are advantaged in the grand (organization-wide) contest for...

Promotions serve two purposes. They ought to provide incentives for employees and to select the best employee for a management position. However, if non-contractible managerial decision rights give rise to private benefits and preference misalignment between managers and the firm, these two...

Few studies have focused on the role of non-CEO top manager inside directors in corporate governance, especially in the context of emerging countries. Despite their tendency to be subject to CEOs, non-CEO top manager inside directors can counterbalance CEOs in specific situations. Using panel...

This study examines the managerial power-hypothesis of selective hedging, which holds that selective hedging is observed more frequently in companies where managers have greater latitude to execute hedging proposals without serious scrutiny or questioning. The hypothesis is tested using...

We study the informed-principal problem in a bilateral asymmetric information trading setting with interdependent values and quasi-linear utilities. The informed seller proposes a mechanism and voluntarily certifies information about the good's characteristics. When the set of certifiable...

Regulators and the firms they regulate interact repeatedly. Over the course of these interactions, the regulator collects data that contains information about the firm's id- iosyncratic private characteristics. This paper studies the case in which the regulator uses information gleaned from past...