The paper uses a simple multitask career concern model in order to analyse the incentives of government agencies' officials. Incentives are impaired by the agency pursuing multiple missions. A lack of focus is even more problematic in the case of fuzzy missions, that is when outsiders are uncertain about the exact nature of the missions actually pursued by the agency. Consequently agencies pursuing multiple missions receive less autonomy. The paper further shows that professionalization creates a sense of mission for the agency, and that the specialization of officials raises their incentives. Last, the paper compares its predictions with the stylized facts on Government bureaucracies.

Many incentives in organizations arise not through explicit formal incentive contracts but rather implicitly through career concerns. This paper models career concerns through agents trying to manipulate the market assessment of their future productivity. The information flow from current actions to market assessment is therefore crucial in determining the nature of these incentives. Improved information may either increase or reduce incentives. The impact of information provides a major distinction between the explicit and implicit incentives model. The paper derives general results on comparisons of information structures which serve as counterparts to the standard results on information structures in the principal-agent model: sufficient statistic, impact of a Blackwell garbling, comparison of inclusive information structures.

The paper analyzes the impact of price caps agreed upon by industry participants. Price caps, like mergers, allow firms to solve Cournot’s multiple-marginalization problem, but unlike mergers, they do not stifle price competition in case of substitutes or facilitate foreclosure in case of complements. The paper first demonstrates this for nonrepeated interaction and general demand and cost functions. It then shows that allowing price caps has no impact on investment and entry in case of substitutes. Under more restrictive assumptions, the paper finally generalizes the insights to repeated price interaction, analyzing coordinated effects when goods are not necessarily substitutes.

A major policy issue in standard setting is that patents that are ex ante not that important, by being included into a standard, may become standard-essential patents. In an attempt to curb the monopoly power that they create, most standard-setting organizations require the owners of patents covered by the standard to make a loose commitment to grant licenses on reasonable terms. Such commitments unsurprisingly are conducive to litigation. This paper builds a framework for the analysis of these patents, identifies several types of inefficiencies attached to the lack of price commitments, and shows how structured price commitments restore competition and why such commitments may not arise spontaneously in the marketplace.

The paper develops a theory of costly communication in which the sender’s and receiver’s motivations and abilities endogenously determine the communication mode and the transfer of knowledge. Communication is modeled as a problem of moral hazard in teams, in which the sender and receiver select persuasion and message elaboration efforts. The model is shown to provide a rich set of insights concerning (i) the impact of incentive alignment on communication strategies, (ii) the relative influence and the complementarity/substitutability between issue‐relevant communication and cues (information that relates to the credibility of the sender rather than to the issue at stake), and (iii) the path dependency of communication.

The paper's main contribution is to provide a rational for advocacy. After observing that many organizations (corporations, judiciary, and the executive and legislative branches of government) use competition among enfranchised advocates of special interests to improve policy making, it argues that advocacy has two major benefits. First, the advocates' rewards closely track their pursuing several conflicting causes at one time. Second, advocacy enhances the integrity of decision making by creating strong incentives to appeal in case of an abusive decision. The paper also analyzes the costs of advocacy in terms of manipulation and garbling of information. It further shows that it may be costly for both the organization and interested parties themselves to let these parties plead their own causes instead of being represented. The paper concludes with two applications to comparative legal systems and to the organization of Congress and with suggestions for future research.

This paper develops a theory of the allocation of formal and real authority within organizations. Real authority is determined by the structure of information, which in turn depends on the allocation of formal authority. An increase in an agent's real authority promotes initiative but results in a loss of control for the principal. The paper analyzes the allocation of formal authority as well as some determinants of the subordinates' real authority: overload, lenient rules, urgency of decision, reputation, performance measurement, and multiplicity of superiors. Finally, the amount of communication in an organization is shown to depend on the allocation of formal authority.

Central planning of production is usually performed under asymmetric information which leads to use of an incentive scheme. As the planner revises the scheme over time to take into account information provided by the firm's performance, this induces firms to underproduce to avoid more demanding schedules in the future—the ratchet effect. This paper explores this phenomenon under the realistic assumption that the planner cannot commit himself to a revision procedure. We show that the ratchet effect exists, in the sense that the planner may choose a scheme which is suboptimal from a static viewpoint in order to induce revelation, with the marginal price of output exceeding its optimal static value.

There are substantial differences between open-source projects and traditional innovative efforts in private firms. Private firms usually pay their workers, direct and manage their efforts, and control the output and intellectual property created. In an open-source project, however, a body of original material is made publicly available for others to use, under certain conditions. Contributions to open-source projects are made by a diverse array of individual contributors, and for-profit corporations, who must often agree to make enhancements to the original material widely available for nominal cost. This paper empirically examines the dynamics of contributions to open-source software projects. We show that the share of corporate contributions in a sample of approximately 100 open-source projects between 2001 and 2004 is greater in larger and growing projects.