This introductory essay offers a brief guided tour of the main developments in the theory of implicit contracts, from its inception to the present. It is not intended as a survey but, rather, as an appraisal of the progress that has been made, the difficulties that remain, and as an outline of the microeconomic and macroeconomic issues that seem to invite additional work.

This study explores the following question: Does a worker's relationship to technology and degree of job specialization influence in a predictable way his integration into or alienation from work? The book shows that the degree of differentiation in the division of labor is related to technology in a similar manner in both the office and factory and that automated technology reduces the levels of alienation among both office employees and factory workers. The author samples three man-machine relationships in the office and factory: (1) workers in non-mechanized production systems; (2) machine operators in mechanized production systems; and (3) operators or monitors in automated production systems. In addition to separate chapters on office and factory workers, one chapter compares degrees and types of alienation among office employees as compared to factory workers.This book is one of the last in a series of research studies on the impact of computers completed by the Industrial Relations Section of the Alfred P. Sloan School of Management at M.I.T. In a foreword to the book, Charles A. Myers notes that important study puts to rest extreme fears about the alienation of workers as a consequence of automation. Professor Shepard's study provides new insights about the impact of advanced mechanization and automation in offices, which computers and allied information technology are invading at a rapid rate...As a sociologist among economists, [he] has brought fresh perspective to this series of research reports.

The paper shows that between two competitive but risky economies with no insurance markets, free trade may be Pareto inferior to no trade. The model is simple enough to show clearly the role prices play in transferring and sharing risk when there is an incomplete set of markets, but rich enough to exhibit the resulting inefficiencies dramatically.

This paper conducts a cross-country empirical study of the impact of institutions and agency conflicts on ownership reforms and their implications for changes in performance and efficiency. We examine two main questions. First, we evaluate the effects of certain property rights and institutional quality measures on performance and efficiency. We find that property rights and contracting rights protections contribute to stronger post-privatization performance. Second, we ask whether sectors undergoing changes from state to private ownership exhibit better or worse performance than sectors remaining public. We find an insignificant effect of privatization in ordinary least squares estimates and a negative short-term effect after correcting for endogeneity of privatization decisions that disappears in the long run, consistent with recently privatized enterprises facing short-run costs of restructuring and the challenges of mitigating agency and expropriation concerns.

In this paper we are concerned with the following question: in any economy with several public goods, what are the conditions under which the conventional optimality rule of equality between the sum of marginal rates of substitution and the marginal rate of transformation still holds even in the presence of distortionary taxation?Two cases are considered.In the first case, the taxes may be arbitrary.In the second case, the taxes are optimally chosen.

In a dynamic model of moral hazard, competition can undermine prudent bank behavior. While capital-requirement regulation can induce prudent behavior, the policy yields Pareto-inefficient outcomes. Capital requirements reduce gambling incentives by putting bank equity at risk. However, they also have a perverse effect of harming banks' franchise values, thus encouraging gambling. Pareto-efficient outcomes can be achieved by adding deposit-rate controls as a regulatory instrument, since they facilitate prudent investment by increasing franchise values. Even if deposit-rate ceilings are not binding on the equilibrium path, they may be useful in deterring gambling off the equilibrium path.

This paper endogenizes intervention in financial crises as the strategic negotiation between a regulator and creditors of distressed banks. Incentives for banks to contribute to a voluntary bail-in arise from their exposure to financial contagion. In equilibrium, a bail-in is possible only if the regulator’s threat to not bail out insolvent banks is credible. Contrary to models without intervention or with government bailouts only, sparse networks enhance welfare for two main reasons: they improve the credibility of the regulator’s no-bailout threat for large shocks, and they reduce free-riding incentives among bail-in contributors when the threat is credible.