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Displaying results 51 to 60 of 60.

  1. Monitoring and pay
    an experiment on contract design with endogenous monitoring ; conference paper
    Author: Dittrich, Dennis; Kocher, Martin
    Published: 2014
    Publisher:  ZBW, [Kiel

    We implement a laboratory experiment in which a principal has to decide on monitoring intensity and pay to investigate whether they are complements or substitutes. Wage level, monitoring intensity, and consequently the desired enforceable effort... more

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    We implement a laboratory experiment in which a principal has to decide on monitoring intensity and pay to investigate whether they are complements or substitutes. Wage level, monitoring intensity, and consequently the desired enforceable effort level are jointly determined by the maximization problem of the firm. As a result, theoretically monitoring and pay should be complements. The between-treatment variation in our experiment is qualitatively in line with the normative prediction of the model under standard assumptions. Also the subject-specific variation indicates that monitoring and pay are considered as complements. Yet, we also find evidence for reciprocal behavior. Our data analysis shows, however, that it does not pay for the principal to only rely on the reciprocity of his agents.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/100580
    Edition: Preprint submitted to Draft
    Series: Array ; V1
    Subjects: incentive contracts; supervision; efficiency wages; experiment; incomplete contracts; reciprocity
    Scope: Online-Ressource (29 S.), graph. Darst.
  2. Global sourcing of heterogeneous firms
    theory and evidence
    Author: Kohler, Wilhelm; Smolka, Marcel
    Published: 2015
    Publisher:  CESifo, München

    This paper investigates the role of firm productivity in drawing firm boundaries in global sourcing. Our analysis focuses on how productivity affects the allocation of ownership rights between the headquarter of a firm and an intermediate input... more

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    Staats- und Universitätsbibliothek Bremen
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    Niedersächsische Staats- und Universitätsbibliothek Göttingen
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    This paper investigates the role of firm productivity in drawing firm boundaries in global sourcing. Our analysis focuses on how productivity affects the allocation of ownership rights between the headquarter of a firm and an intermediate input supplier (vertical integration vs. outsourcing), as well as the location of intermediate input production (offshore vs. domestic). Unlike previous work, we allow for a fully flexible productivity effect with varying magnitude and sign across different industries. Our estimation strategy is motivated by the canonical economic model of sourcing due to Antràs & Helpman (2004). This model invokes the property rights theory of the firm in order to pin down firm boundaries as the outcome of an interaction between firm heterogeneity and the industry's sourcing intensity (i.e. the importance of inputs sourced from suppliers relative to headquarter inputs). We demonstrate that, at the level of the firm, the model implies a productivity effect that varies not just in magnitude (and potentially non-monotonically), but also in sign with the sourcing intensity of the industry. To estimate the effects empirically, we use Spanish firm-level data from the Encuesta sobre Estrategias Empresariales (ESEE). We find a pattern of effects whereby productivity stimulates vertical integration in industries of low sourcing intensity, but favors outsourcing in industries of high sourcing intensity. Moreover, we find that productivity boosts offshoring throughout all industries, with the effect increasing monotonically in the sourcing intensity. Our results lend strong empirical support to the property rights view of the firm in the global economy.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/107316
    RVK Categories: QB 910
    Series: Array ; 5184
    Subjects: global sourcing; incomplete contracts; firm productivity; firm-level data
    Scope: Online-Ressource ([1], 39 S.), graph. Darst.
  3. Communication and trust in principal-team relationships
    experimental evidence
    Author: Kleine, Marco; Kube, Sebastian
    Published: 2015
    Publisher:  IZA, Bonn

    We study how upward communication - from workers to managers - about individual efforts affects the effectiveness of gift exchange as a contract-enforcement device for work teams. Our findings suggest that the use of such self-assessments can be... more

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    DS 4 (8762)
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    We study how upward communication - from workers to managers - about individual efforts affects the effectiveness of gift exchange as a contract-enforcement device for work teams. Our findings suggest that the use of such self-assessments can be detrimental to workers' performance. In the controlled environment of a laboratory gift-exchange experiment, our workers regularly overstate their own contribution to the joint team output. Misreporting seems to spread distrust within the team of workers, as well as between managers and workers. This manifests itself in managers being less generous with workers' payments, and in workers being more sensitive to the perceived kindness of their relative wage payments. By varying the source and degree of information about individual efforts between treatments, we see that precise knowledge about workers' actual contributions to the team output is beneficial for the success of gift-exchange relationships. Yet, workers' self-assessments can be a problematic tool to gather this information.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/107547
    Series: Discussion paper series / Forschungsinstitut zur Zukunft der Arbeit ; 8762
    Subjects: communication; gift exchange; incomplete contracts; reciprocity; performance appraisal; self-assessment; work team; laboratory experiment
    Scope: Online-Ressource (32 S.), graph. Darst.
  4. When prices hardly matter
    incomplete insurance contracts and markets for repair goods
    Author: Nell, Martin; Richter, Andreas; Schiller, Jörg
    Published: 2006
    Publisher:  Fakultät für Betriebswirtschaft, Ludwig-Maximilians-Universität München, München

    This paper looks at markets characterized by the fact that the demand side is insured. In these markets a consumer purchases a good to compensate consequences of unfavorable events, such as an accident or an illness. Insurance policies in most lines... more

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    Niedersächsische Staats- und Universitätsbibliothek Göttingen
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    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
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    This paper looks at markets characterized by the fact that the demand side is insured. In these markets a consumer purchases a good to compensate consequences of unfavorable events, such as an accident or an illness. Insurance policies in most lines of insurance base indemnity on the insured's actual expenses, i.e., the insured would be partially or completely reimbursed when purchasing certain goods. In this setting we discuss the interaction between insurance and repair markets by focusing, on the one hand, upon the development of prices and the structure of markets with insured consumers, and, on the other hand, the resulting backlash on optimal insurance contracting. We show that even in the absence of ex post moral hazard the extension of insurance coverage will lead to an increase in prices as well as to a socially undesirable increase in the number of repair service suppliers, if repair markets are imperfect.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/104459
    Series: Array ; 2006-02
    Subjects: insurance; incomplete contracts; repair markets
    Scope: Online-Ressource (27 S.), graph. Darst.
  5. Handing out guns at a knife fight
    behavioral limitations of subgame-perfect implementation
    Author: Fehr, Ernst; Powell, Michael; Wilkening, Tom
    Published: 2014
    Publisher:  CESifo, München

    The assumption that payoff-relevant information is observable but not verifiable is important for many core results in contract, organizational and institutional economics. However, subgame-perfect implementation (SPI) mechanisms - which are based on... more

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    Staats- und Universitätsbibliothek Bremen
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    Niedersächsische Staats- und Universitätsbibliothek Göttingen
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    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
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    DS 63 (4948)
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    The assumption that payoff-relevant information is observable but not verifiable is important for many core results in contract, organizational and institutional economics. However, subgame-perfect implementation (SPI) mechanisms - which are based on off-equilibrium arbitration clauses that impose fines for lying and the inappropriate use of arbitration - can be used to render payoff-relevant observable information verifiable. Thus, if SPI mechanisms work as predicted they undermine the foundations of important economic results based on the observable but non-verifiable assumption. Empirical evidence on the effectiveness of SPI mechanisms is, however, scarce. In this paper we show experimentally that SPI mechanisms have severe behavioral limitations. They induce retaliation against legitimate uses of arbitration and thus make the parties reluctant to trigger arbitration. The inconsistent use of arbitration eliminates the incentives to take first-best actions and leads to costly disagreements such that individuals - if given the choice - opt out of the mechanism in the majority of the cases. Incentive compatible redesigns of the mechanism solve some of these problems but generate new ones such that the overall performance of the redesigned mechanisms remains low. Our results indicate that there is little hope for SPI mechanisms to solve verifiability problems unless they are made retaliation-proof and, more generally, robust to other-regarding preferences.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/102108
    Series: Array ; 4948
    Subjects: implementation theory; incomplete contracts; experiments
    Scope: Online-Ressource ([1], 58 S.), graph. Darst.
  6. Handing out guns at a knife fight
    behavioral limitations of subgame-perfect implementation
    Author: Fehr, Ernst; Powell, Michael; Wilkening, Tom
    Published: 2014
    Publisher:  IZA, Bonn

    The assumption that payoff-relevant information is observable but not verifiable is important for many core results in contract, organizational and institutional economics. However, subgame-perfect implementation (SPI) mechanisms - which are based on... more

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 4 (8404)
    Inter-library loan:
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    The assumption that payoff-relevant information is observable but not verifiable is important for many core results in contract, organizational and institutional economics. However, subgame-perfect implementation (SPI) mechanisms - which are based on off-equilibrium arbitration clauses that impose fines for lying and the inappropriate use of arbitration - can be used to render payoff-relevant observable information verifiable. Thus, if SPI mechanisms work as predicted, they undermine the foundations of important economic results based on the observable but non-verifiable assumption. Empirical evidence on the effectiveness of SPI mechanisms is, however, scarce. In this paper we show experimentally that SPI mechanisms have severe behavioral limitations. They induce retaliation against legitimate uses of arbitration and thus make the parties reluctant to trigger arbitration. The inconsistent use of arbitration eliminates the incentives to take first-best actions and leads to costly disagreements such that individuals - if given the choice - opt out of the mechanism in the majority of the cases. Incentive compatible redesigns of the mechanism solve some of these problems but generate new ones such that the overall performance of the redesigned mechanisms remains low. Our results indicate that there is little hope for SPI mechanisms to solve verifiability problems unless they are made retaliation-proof and, more generally, robust to other-regarding preferences.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/101934
    Series: Discussion paper series / Forschungsinstitut zur Zukunft der Arbeit ; 8404
    Subjects: implementation theory; incomplete contracts; experiments
    Scope: Online-Ressource (58 S.), graph. Darst.
  7. Should you allow your agent to become your competitor?
    on non-compete agreements in employment contracts
    Author: Kräkel, Matthias; Sliwka, Dirk
    Published: 2006
    Publisher:  Sonderforschungsbereich/Transregio 15, Mannheim [u.a.]

    We discuss a principal-agent model in which the principal has the opportunity to include a non-compete agreement in the employment contract. We show that not imposing such an agreement can be beneficial for the principal as the possibility to leave... more

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    Niedersächsische Staats- und Universitätsbibliothek Göttingen
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    DS 445 (99)
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    We discuss a principal-agent model in which the principal has the opportunity to include a non-compete agreement in the employment contract. We show that not imposing such an agreement can be beneficial for the principal as the possibility to leave the firm generates implicit incentives for the agent. The principal prefers to impose such a clause if and only if the value created is sufficiently small relative to the agent's outside option. If the principal can use an option con- tract for retaining the agent, she will never prefer a strict non-compete agreement.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/94152
    Series: SFB/TR 15 Discussion Paper ; 99
    Subjects: fine; incentives; incomplete contracts; non-compete agreements; option contract
    Scope: Online-Ressource ([1], 27 S.), graph. Darst.
  8. Exit options and the allocation of authority
    Author: Bester, Helmut; Krähmer, Daniel
    Published: 2013
    Publisher:  Sonderforschungsbereich/Transregio 15, Mannheim [u.a.]

    We analyze the optimal allocation of authority in an organization whose members have conflicting preferences. One party has decision-relevant private information, and the party who obtains authority decides in a self-interested way. As a novel... more

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    Niedersächsische Staats- und Universitätsbibliothek Göttingen
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    DS 445 (401)
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    We analyze the optimal allocation of authority in an organization whose members have conflicting preferences. One party has decision-relevant private information, and the party who obtains authority decides in a self-interested way. As a novel element in the literature on decision rights, we consider exit option contracts: the party without decision rights is entitled to prematurely terminate the relation after the other party's choice. We show that under such a contract it is always optimal to assign authority to the informed and not to the uninformed party, irrespective of the parties' conflict of interest. Indeed, the first-best efficient solution can be obtained by such a contract.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/93927
    Series: Discussion paper / Governance and the Efficiency of Economic Systems ; 401
    Subjects: Authority; decision rights; exit options; incomplete contracts; asymmetric information
    Scope: Online-Ressource (29 S., 189,73 KB)
  9. Convertible securities and venture capital finance
    Author: Schmidt, Klaus M.
    Published: 1999
    Publisher:  CESifo, München

    This paper offers a new explanation for the prevalent use of convertible securities in venture capital finance. Convertible securities can be used to endogenously allocate cash flow rights as a function of the realized quality of the project. This... more

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    Staats- und Universitätsbibliothek Bremen
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    Niedersächsische Staats- und Universitätsbibliothek Göttingen
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    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
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    DS 63 (217)
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    Location:
    Universitätsbibliothek Osnabrück
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    This paper offers a new explanation for the prevalent use of convertible securities in venture capital finance. Convertible securities can be used to endogenously allocate cash flow rights as a function of the realized quality of the project. This property can be used to mitigate the double moral hazard problem be t ween the entrepreneur and the venture capitalist. It is shown that an optimally designed convertible security outperforms any mixture of debt and equity and that it can induce both parties to invest efficiently. The result is robust to renegotiation and t o changes in the timing of investments and information flows.

     
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    Language: English
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    Format: Online
    Other identifier:
    hdl: 10419/75570
    Series: CESifo Working Paper ; 217
    Subjects: convertible securities; venture capital; corporate finance; double moral hazard; incomplete contracts
    Scope: Online-Ressource (31 S.)
  10. Bounded rationality as an essential component of the holdup problem
    Author: Erlei, Mathias; Roß, Wiebke
    Published: 2013
    Publisher:  Techn. Univ., Clausthal-Zellerfeld

    We provide experimental evidence for the hypothesis that bounded rationality is an important element of the theory of the firm. We implement a simplified version of a mechanism designed to perfectly solve the holdup problem under conditions of... more

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    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
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    DS 498 (9)
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    We provide experimental evidence for the hypothesis that bounded rationality is an important element of the theory of the firm. We implement a simplified version of a mechanism designed to perfectly solve the holdup problem under conditions of perfect rationality (Maskin 2002). We test whether this mechanism is able to perfectly solve our experimental holdup problem or may at least improve economic performance. We find that this is not the case: the implementation of the mechanism worsens economic performance. We reconstruct the main features of participants' behavior by applying the logit agent quantal response equilibrium (McKelvey and Palfrey 1998) as an equilibrium concept that takes players' potential mistakes into account.

     
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    Volltext (kostenfrei)
    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/107450
    Edition: Version: October 2014
    Series: TUC working papers in economics ; 9
    Subjects: Bounded rationality; transaction costs; incomplete contracts; experiment; mechanism design
    Scope: Online-Ressource (25 S.), graph. Darst.