Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142013
Authors: 
Li, Jin
Matouschek, Niko
Powell, Michael
Year of Publication: 
2015
Series/Report no.: 
CSIO Working Paper 0139
Abstract: 
We examine an infi nitely repeated game between a principal, who has the formal authority to decide on a project, and a biased agent, who is privately informed about what projects are available. The optimal relational contract speaks to how power is earned, lost, and retained. It shows that entrenched power structures are consistent with optimal administration of power. And it provides new perspectives on why similar firms organize differently, even when those organizational differences lead to persistent differences in performance, and why established firms fail to exploit new opportunities, even when they are publicly observable.
Subjects: 
internal organization
relational contracting
power
JEL: 
D23
D82
L23
Document Type: 
Working Paper

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