Professor Robin Wells Spring 1999
 
Economics 14.22: Organizations and Contracts
Schedule and Syllabus

 

*denotes required reading that is contained in the course packet.

"M&R" refer to the textbook, Milgrom and Roberts, "Economics, Organizations

and Management"

 

 

February 3 #1 Introduction: Coase Theorem and Value Maximization
 

M&R: Chs. 1 and 2
*Wells: "Introduction: the Economics of Organizations, Firms and Contracts"
 

February 8 #2 The Importance of Efficiency/ Contractual Incompleteness

and Private Information
M&R: Chs. 1 and 2
*Wells: "Introduction: the Economics of Organizations, Firms and Contracts"

M&R: Ch. 5, pp. 126-140

  

February 10 #3 Bargaining and Private Information

M&R: Ch. 5, pp. 140-149

*Wilson, "Negotiation with Private Information:
Litigation, Arbitration and Strikes"

 

February 16 #4 Adverse Selection

M&R: Ch. 5, pp. 149-161
Notes on Adverse Selection (on web-site)
 

February 17 #5 Adverse Selection: More on Signalling and Screening

*Wilson, "Simple Models of Bargaining"
*Wilson, "The 1985-6 Strike at Hormel"
 

February 22 #6 Moral Hazard

M&R: Ch. 6, pp. 166-185
Notes on Moral Hazard (on web-site)
*San Jose Mercury News, "Sears Accused of Rip- Offs"
 
February 24 #7 Moral Hazard
M&R: Ch. 6, pp. 185-196, 200-203
Notes on Moral Hazard (on web-site)
 

March 1 #8 The Linear Incentive Contract Model

           M&R: Ch. 7

*Wells, "Principles of Incentive Contracting" and

"Theory of Incentive Contracts"
 

 

March 3 #9 The Linear Incentive Contract Model

M&R: Ch. 7

*Wells, "Principles of Incentive Contracting" and

"Theory of Incentive Contracts"
 
 
 

March 8 #10 Piece Rates and the Ratchet Effect M&R: pp. 392-396, 233-236   March 10 #11 Piece Rates and the Ratchet Effect M&R: pp. 392-396, 233-236

*Lazear: "Performance Pay and Productivity"

Multi-Task Moral Hazard

Notes on Muti-Task Moral Hazard (on web-site)

  March 15 #12 Multi-Task Moral Hazard, Review

 

March 17 #13 In-class Midterm

 

March 29 #14 Compensation and Motivation

M&R: Ch. 12
 

March 31 #15 Compensation and Motivation

M&R: Ch. 12
Executive and Managerial Compensation M&R: Ch. 13

*New York Times: "Growing Trend: Giant Payoffs?"

and "New Road to Riches?"
 
  April 5 #16 Executive and Managerial Compensation
M&R: Ch. 13

www.crystalreport.com

 

April 7 #17 Financial Structure, Ownership and Corporate Control

 M&R: Ch. 15
*The Economist: "Civil War at Arthur Andersen"
 
 
 
April 12 #18 Financial Structure, Ownership and Corporate Control
 
M&R: Ch. 15
*Gordon Cain and the Sterling Group (A) and (B)
 
 

April 14 #19 Ownership and Property Rights
 

M&R: Ch. 9
 
 

April 21 #20 Hold-up and Specific Assets
 

M&R: Ch. 9

Notes on Hold-Up (on web-site)
 
 
 

April 26 #21
*Palay, "Comparative Institutional Economics: The Governance of Rail Freight Contracting"

 

April 28 #22 Rents and Efficiency
 

M&R: Ch. 8

 

May 3 #23 Rents and Efficiency
 

M&R: Ch. 8

 

May 5 #24 Rents and Efficiency

*McMillan, "Managing Suppliers: Incentive Systems

in Japanese and U.S. Industry"

*Wells, "Opportunistic Behavior in Sub-Contracting Relationships"

  
 

May 10 #25 *Lloyd?s of London: (A) and (B)
 

Pick up Take-Home Exam in Class

 

May 13 #26 *Wells, "Note on Debacle at Salomon Bros."
 

Turn in Take-Home Exam in Class

 

 

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