A Theory of Authority in Bilateral Contracting

Two players are involved in a joint project during which a decision must be reached. Each player has private information about future profits. Authority gives one player the right to decide first in a pre-defined set of alternatives. In this framework, I show that (partial) authority should be assigned to the player who gets the highest share of the total surplus. This organizational architecture replicates the performance of an optimal revelation mechanism without the cost of hiring a third party acting as a principal.Contract, asymmetric information, control rights, limited liability, hidden information

Attorneys Must Not Enter Partnership Agreements Prohibiting Themselves from Representing Former Clients Upon Termination of Partnership. Dwyer v. Jung, 133 N.J. Super. 343, 336 A.2d 498 (Ch. 1975), appeal docketed, No. 3378-74, App. Div., June 18, 1975.

Three attorneys entered into a partnership agreement for the practice of law. Their agreement included a provision that assigned the partnership\u27s insurance carrier clients to individual partners upon the termination of the partnership and restricted the partners from doing business with a client designated as that of another partner for a period of five years. Of these insurance carrier clients, 154 were assigned to the defendant while five were allotted to the plaintiffs. After the partnership was dissolved, the plaintiffs sought a judicial accounting. The defendant counterclaimed, contending that the plaintiffs violated the restrictive covenant of the original partnership agreement by attempting to do business with clients designated as his. Plaintiffs denied the charge and argued that the covenant apportioning clients to individual partners had the effect of prohibiting the other partners from dealing with those clients and was therefore void as against public policy. The plaintiffs also contended that they had entered into the agreement at the insistence of the defendant, even though all parties regarded the provision as unenforceable. The Superior Court of New Jersey, Chancery Division, held that the covenant in the partnership agreement restricted the partnership\u27s clients in their choice of counsel and was thus void for public policy reasons. The court refused to apply the standards usually used in evaluating restrictive covenants

Fair division under asymmetric information

Game Theory

Do Spouses Cooperate? And If Not: Why?

Models of household economics require an understanding of economic interactions in families. Social ties, repetition and reduced strategic uncertainty make social dilemmas in couples a very special case that needs to be empirically studied. In this paper we present results from a large economic experiment with 100 maritally living couples. Participants made decisions in a social dilemma with their partner and with a stranger. We predict behavior in this task with individual and couples' socio-demographic variables, efficiency preferences and couples' marital satisfaction. As opposed to models explaining behavior amongst strangers, the regressions on couples’ decisions highlight clear patterns concerning cooperation behavior which could inspire future household decision-making models.Noncooperative Games; Laboratory, Individual Behavior; Household Production and Intra-household Allocation

Party Formation and Coalitional Bargaining in a Model of Proportional Representation

We study a game theoretic model of a parliamentary democracy under proportional representation where `citizen candidates' form parties, voting occurs and governments are formed. We study the coalition governments that emerge as functions of the parties' seat shares, the size of the rents from holding office and their ideologies. We show that governments may be minimal winning, minority or surplus. Moreover, coalitions may be `disconnected'. We then look at how the coalition formation game affects the incentives for party formation. Our model explains the diverse electoral outcomes seen under proportional representation and integrates models of political entry with models of coalitional bargaining.Proportional representation, Party formation, Coalitions

R&D cooperation versus R&D subcontracting: empirical evidence from French survey data.

This paper uses a survey of French firms active in R&D to identify the determinants of R&D outsourcing and of the ensuing trade-off between R&D subcontracting and R&D cooperation. Internal R&D expenditures increase both the probability of outsourcing and the number of R&D partners. Investment in fundamental R&D, group belonging, and the sector’s high R&D intensity positively influences the probability of R&D outsourcing but have less impact on the number of partners. R&D subcontracting is more likely than R&D cooperation when the relationship deals with generic, standardized R&D processes, as reflected in the influence of several qualitative proxies.R&D cooperation, R&D subcontracting, organizational choices.

The Timing of Work and Work-Family Conflicts in Spain: Who Has a Split Work Schedule and Why?

Spain, as other south-Mediterranean countries, is characterized for the predominance of split work schedules. Split work schedules typically consist of 5 hours of work in the morning (typically from 9 am to 2 pm), followed by a 2 hour break and another 3 hours of work in the afternoon/evening (typically from 4 pm to 7 pm). Because of the evening work hours, split work schedules are contributing to work-family conflicts in the midst of significantly higher female labor force participation. Our purpose is to examine who has a split work schedule and why. We focus on full-time working women with full-time working partners, for whom the need to reconcile work and family responsibilities is likely to be more pressing. We first find that women with partners with a split work schedule or without children (less than 20 percent our sample) are more likely to have a split work schedule. Yet, despite the revealed preference for a continuous work schedule of the remaining women in our sample, we fail to find evidence of a compensating wage differential for having a split work schedule. We thus examine why and find that younger and less educated women more likely to be constrained in their job choices are more likely to work in the private sector, where split work schedules are primarily found.work-family conflicts, timing of work, split/continuous time schedule, compensating wage differentials, job constraints

Mommies' Girls Get Dresses, Daddies' Boys Get Toys: Gender Preferences in Poland and their Implications

We examine the relationship of child gender with family and economic outcomes using a large dataset from the Polish Household Budgets' Survey (PHBS) for years 2003-2009. Apart from studying the effects of gender on family stability, fertility and mothers' labor market outcomes, we take advantage of the PHBS' detailed expenditure module to examine effects of gender on consumption patterns. We find that a first born daughter is significantly less likely to be living with her father compared to a first born son and that the probability of having the second child is negatively correlated with a first born daughter. Using the context of the collective model we provide interpretation of these results from the perspective of individual parental gender preferences. We also examine the potential effects of sample selection bias which may affect the results and may be important for other findings in the literature. Labor supply of mothers and overall child-related consumption is not affected by gender of the first child, but the pattern of expenditure significantly varies between those with first born sons and first born daughters. One possible interpretation of the findings is that Polish fathers have preferences for sons and Polish mothers have preferences for daughters. Expenditure patterns suggest potential early determination of gender roles – mommies' girls get dresses and daddies' boys get toys.gender preferences, fertility, child outcomes, family structure

Auditor changes and tendering: UK interview evidence

Competitive pressures in the audit market have led to aggressive fee renegotiation and tendering by companies. This paper reviews microeconomic tender theory and finds it to be of limited value in the audit context. Content analysis of semi-structured interviews conducted with the finance directors of 12 UK listed companies which had recently tendered and/or changed auditor are used to investigate the tender/change process. Contrary to popular belief, fee levels do not necessarily dominate the decision to change auditors, rather changes within the client company, audit staffing, and auditor's professionalism and competency issues dominate. Nor is the selection of a tender "winner" generally based solely on price, as predicted by tender theory and as would be expected when the consequences of audit failure do not fall on the directors. However, consistent with economic theory, the winning bid appears frequently to be too low, resulting in attempts by auditors to subsequently increase fees and resentment by the finance director. Directors generally appear to view the audit tender as relating to not only the attest function per se, but to a larger package of services concerning the financial reporting function. The relative importance of price versus non-price competition in auditor choice is found to vary across companies. Auditor choice is influenced strongly by both economic and behavioural factors, in particular, by directors' assessment of the quality of non-attest services and the expected quality of working relationships, in addition to price and audit quality