Delegated information gathering decisions

Article Abstract:

A grouping of agency problems is examined in which a principal who is responsible for production designs delegates information-gathering responsibility to an agent. The value of sample outcomes and other signals in improving contract efficiency is at issue, particularly as it relates to resolving the moral hazard associated with the unobservability of the agent's effort. It is demonstrated that sample outcomes are helpful in offering appropriate incentives, as well as in production decision conditioning. Follow-up observability of either the payoff from productive or the state of nature is also demonstrated to be valuable for incentive purposes in all but the least interesting and highly specialized situations. Findings might apply to census takers, political pollsters, research scientists, geological surveyors, talent scouts, corporate auditors, and traffic monitors.

Human resource management, Information services, Information storage and retrieval, Delegation of authority, Line and staff organization, Decentralization (Management)

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Information asymmetry, diversification, and cost of capital

Article Abstract:

The interplay of asymmetric information, cost of capital, and diversification is examined in large economies. Findings show that: equilibrium risk premiums are entirely determined by betas and factor risk premiums; greater information asymmetry leads to higher factor risk premiums and higher capital costs; and that information asymmetry has no cross-sectional effect on cost of capital.

Economic aspects, Capital expenditures, Diversification (Investments), Information asymmetry

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Commitments and disclosure in oligopolies

Article Abstract:

The welfare effects of pre-production commitments made by firms that are competing in oligopoly markets are studied. Commitments include devices that provide a strategic incentive to change production choices. Findings show that as the number of commitments increases, firms achieve full Stackelberg warfare and realization of strategic goals.

Production Management, Methods, Oligopolies, Disclosure of information

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