We show that joint ownership (partnership or joint venture) can implement Þrst best in a twice repeated game when each agent believes that the other party is honest with a very small probability. In the Þnal period the ownership structure is renegotiated because joint ownership is ex post inefficient. If an agent has cheated her outside option is very low since by cheating she has lost her repu...

Organizations, Diffused Pivotality and Immoral Outcomes This paper studies how organizational design affects moral outcomes. Subjects face the decision to either kill mice for money or to save mice. We compare a Baseline treatment where subjects are fully pivotal to a Diffused-Pivotality treatment where subjects simultaneously choose in groups of eight. In the latter condition eight mice are ki...

How much do a manager’s interpersonal skills with subordinates, which we call people management skills, affect employee outcomes? Are managers rewarded for having such skills? Using personnel data from a large, high-tech firm, we show that survey-measured people management skills have a strong negative relation to employee turnover. A causal interpretation is reinforced by research designs expl...

Authority and power permeate political, social, and economic life, but empirical knowledge about the motivational origins and consequences of authority is limited. We study the motivation and incentive effects of authority experimentally in an authoritydelegation game. Individuals often retain authority even when its delegation is in their material interest—suggesting that authority has nonpecu...

Economic growth in pre-industrial Europe was driven by the expansion of the market. The ‘market’ was a complex commercial structure made up of merchant firms, merchant associations, and organized markets. This paper provides an overview of the pre-industrial commercial structure, of how it functioned, and of how it evolved. JEL Categories: N13, D23, L14, L81, O12 *This paper is a draft chapter ...

We examine information aggregation regarding industry capital productivity from privately informed managers in a dynamic model with optimal incentive contracts. Information cascades always occur if managers enjoy limited liability: when beliefs regarding productivity become endogenously extreme (optimistic or pessimistic), learning stops. There is no learning if initial beliefs are extreme, or ...

We consider a self-administered organization characterized by a principal elected by the agents and establish conditions under which self-administration leads to either stronger or weaker incentives than an organization which only pursues exogenous objectives such as profit maximization. While the output of the organization that accrues to society is controlled by the effort of the agents and b...

We study how institutional design influences moral transgression. People are heterogeneous in their feelings of guilt and can share guilt with others. Institutions determine the number of supporters necessary for immoral outcomes to occur. With more supporters required, every supporter can share guilt more easily. This facilitates becoming a supporter. Conversely, an institution requiring more ...

In this paper we study the role of incomplete ex ante contracts for ex post trade. Previous experimental evidence indicates that a contract provides a reference point for entitlements when the terms are negotiated in a competitive market. We show that this finding no longer holds when the terms are determined in a non-competitive way. Our results imply that the presence of a “fundamental transf...

This paper argues that international trade should affect local organization of production in a systematic way. By using the standard Heckscher-Ohlin-Samuelson model we show that the export sector is more likely to demonstrate fragmentation, entrepreneurship and outsourcing compared to the importcompeting sector in a typical labor abundant country. Liberal trade regime will promote entrepreneurs...