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Social and Behavioral Sciences Commons™
Open Access. Powered by Scholars. Published by Universities.®
- Keyword
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- Repeated games (4)
- Durable good (2)
- Firm size (2)
- Household demand (2)
- Intertemporal price discrimination (2)
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- Managerial compensation (2)
- Moral hazard (2)
- Auditing (1)
- Beliefs (1)
- Corporate governance (1)
- Cultures (1)
- Disclosure (1)
- Excess sensitivity (1)
- General equilibrium (1)
- Governance (1)
- Hierarchy (1)
- Incomplete contracting (1)
- Inequality and takeoff (1)
- Learning (1)
- Multiple equilibria (1)
- Nash bargaining (1)
- Network externality (1)
- Network externality. (1)
- Optimal decision architecture (1)
- Overlapping generations (1)
- Persistence (1)
- Polyarchy (1)
- Project selection (1)
- Saving (1)
- Upstream and downstream moral hazard (1)
Articles 1 - 9 of 9
Full-Text Articles in Social and Behavioral Sciences
Future Targets And Multiple Equilibria, Ashok S. Guha, Brishti Guha
Future Targets And Multiple Equilibria, Ashok S. Guha, Brishti Guha
Research Collection School Of Economics
Multiple Pareto-rankable equilibria may obtain in an overlapping generations model where consumers save to reach a fixed target. Existence and uniqueness conditions are discussed. The model displays excess consumption sensitivity to current income and perfect old-age insurance.
The Auditor And The Firm: A Simple Model Of Corporate Cheating And Intermediation, Brishti Guha
The Auditor And The Firm: A Simple Model Of Corporate Cheating And Intermediation, Brishti Guha
Research Collection School Of Economics
We apply a game-theoretic model to the analysis of the recent spate of corporate scandals in which firms have cheated their investors, often with the aid of external auditors. We characterize the different types of equilibria that obtain for different parameter ranges in an auditor’s absence (the parameters we consider being early signal accuracy – a measure of transparency – and withdrawal costs – a measure of the liquidity of investments). We also analyze whether and under what conditions the presence of an informed auditor could lead to an improvement in the sense of honest behavior replacing cheating as the …
The Case Of The Errant Executive: Management, Control And Firm Size In Corporate Cheating, Brishti Guha
The Case Of The Errant Executive: Management, Control And Firm Size In Corporate Cheating, Brishti Guha
Research Collection School Of Economics
Firm insiders – a manager and a board – face moral hazard in relation to their outside shareholders in a repeated game with asymmetric information and stochastic market outcomes. The manager determines whether or not outsiders are cheated; the board, whose objectives differ from those of outside shareholders, attempts to control the manager through compensation contracts and dismissal threats Since compensation determines the manager’s incentive to cheat, firms competing for outside capital publicly announce their managerial contracts. However, secret renegotiation between firm and manager is still possible: so outsiders guard against being cheated by limiting their total stake in any …
Games Suppliers And Producers Play: Upstream And Downstream Moral Hazard With Unverifiable Input Quality, Brishti Guha
Games Suppliers And Producers Play: Upstream And Downstream Moral Hazard With Unverifiable Input Quality, Brishti Guha
Research Collection School Of Economics
We pin down the optimal relational contract between an input supplier and a final goods producer given a framework of bilateral moral hazard with variable but non-verifiable input quality. Given the inability of third parties to verify input quality, each party has an incentive to cheat the other by making a false claim about input quality. We derive the contract which (a) induces honest behavior and brings about the Pareto superior first-best outcome for the widest possible range of exogenous parameters, and (b) maximizes the Nash product of both parties’ payoffs subject to incentive compatibility. An interesting feature of the …
Honesty And Intermediation: Corporate Cheating, Auditor Involvement And The Implications For Development, Brishti Guha
Honesty And Intermediation: Corporate Cheating, Auditor Involvement And The Implications For Development, Brishti Guha
Research Collection School Of Economics
We examine self-enforcing honesty in firm-investor relations in an imperfect public information game. Minimum firm size requirements and moral hazard limit ability to raise outside capital, yielding a floor on personal wealth required to enter entrepreneurship. Credible auditing could create efficiency gains. We propose mandatory disclosure of audit fees and an interpretation of international differences in shareholding patterns. We endogenize auditor-firm collusion and extortion by auditors. We embed our game-theoretic analysis in a general equilibrium model to generate unique equilibria that trace the impact of the distribution of wealth on the existence of the market and consequences for development.
Optimal Sequential Decision Architectures And The Robustness Of Hierarchies And Polyarchies, Winston T. H. Koh
Optimal Sequential Decision Architectures And The Robustness Of Hierarchies And Polyarchies, Winston T. H. Koh
Research Collection School Of Economics
This paper studies collective decision making in the context of a project selection model. We derive the optimal decision architecture in the presence of marginal decision costs, and investigate the circumstances under which the hierarchy and polyarchy emerge as optimal sequential architectures. Our analysis extends previous results on optimal organizational decision-making to a sequential setting, and further demonstrates the fragility of the hierarchy and polyarchy as optimal architectures.
Corruption Across Countries And Regions: Some Consequences Of Local Osmosis, Raaj Sah
Corruption Across Countries And Regions: Some Consequences Of Local Osmosis, Raaj Sah
Research Collection School Of Economics
Large and persistent differences in corruption across comparable countries is a challenging research issue. Even more intriguing are such differences across regions within the same country, because the typically considered socioeconomic and governance characteristics are generally more similar across such regions than across different countries. This paper's principal theme is that individuals’ perceptions of their environments are influenced by the realities that they have faced in the past; these perceptions affect their current and future actions; which in turn influence the current and future realities. An articulation and analysis of these dynamics yields significant observations concerning individuals’ behavior and societal …
Household Demand, Network Externality Effects And Intertemporal Price Discrimination, Winston T. H. Koh
Household Demand, Network Externality Effects And Intertemporal Price Discrimination, Winston T. H. Koh
Research Collection School Of Economics
This paper examines the optimality of intertemporal price discrimination when network externality effects are present in the consumption of a durable good. We conduct our study in two settings. In a model with two household types, utilities are dependent on the cumulative proportion of households that have purchased the durable good. Next, in a model with a continuum of household types, we extend the analysis to the case where households consume both a durable good and a stream of non-durable goods. We show that in both settings, the presence of network externalities facilitates a sales strategy with intertemporal price discrimination.
Household Demand, Network Externality Effects And Intertemporal Price Discrimination, Winston T. H. Koh
Household Demand, Network Externality Effects And Intertemporal Price Discrimination, Winston T. H. Koh
Research Collection School Of Economics
This paper examines the optimality of intertemporal price discrimination when network externality effects are present in the consumption of a durable good. We conduct our study in two settings. In a model with two household types, utilities are dependent on the cumulative proportion of households that have purchased the durable good. Next, in a model with a continuum of household types, we extend the analysis to the case where households consume both a durable good and a stream of non-durable goods. We show that in both settings, the presence of network externalities facilitates a sales strategy with intertemporal price discrimination. …