Vicarious Liability Under a Strict Liability Rule

In this article, we extend the model of Newman, H., and D. Wright. 1990. “Strict Liability in a Principal-Agent Model.” International Review of Law and Economics 10: 219–231 and strengthens their result that the strict liability can attain social optimum in a principal-agent relation to the situation in which the court appreciates any contractual terms regarding apportionment of damages between an employer and an employee under vicarious liability rule. Our model also generalizes and extends vicarious liability to the negligence-based liability rule.

8. Governing Through Bureaucracy

This chapter explores the central government departments, executive agencies, and other public bureaucracies in operation in the UK today, such as those in local and territorial governments. These bodies help make and implement public policies and run public services. The chapter reviews more general work on bureaucracy and public administration, and sets out the theory of politician–bureaucrat relationships (going back to the principal–agent model), before addressing the classic question of civil service influence over public policy. It then takes account of the diversity of bureaucratic organizations operating in Britain today. The chapter also looks at the evidence of how politicians manage to satisfy their political objectives through delegating authority to these bodies.

Design and Application of Information Incentive Mechanism in Operation of Logistics Information Platform

With development of 5G, information economy era marked by IoT has come rapidly and it is the objective always pursued by logistics industry to improve informatization level. During the process of logistics informatization, all levels of governments and enterprises have taken construction of public logistics information level as the main direction of logistics informatization investment. How to build a set of effective information incentive mechanism is the joint pursuit of many logistics information platform administrators. On the basis of principal-agent model, information incentive mechanism is designed in the Paper. At the same time, necessary analysis of information incentive factors is carried out. The research indicates that, with traditional incentive measures, logistics information platform administrators can better stimulate logistics information providers and improve precision of logistics information by virtue of information incentive measures; during the process of informatization, logistics information platform administrators also need to build a supervision system on the basis of certain punitive measures.

ESCALATION OF COMMITMENT AND CEO DEPARTURES: THEORY AND EVIDENCE

The escalation of commitment process involves a decision-maker continuing commitment to an investment after receiving negative information. This study develops a principal-agent model to explore how escalation decisions are linked with departures of CEOs from the position. With asymmetric information, a CEO has an incentive to conceal prior decision errors by escalating commitment to failing investments and leaving the firm before the outcome of investment decisions is disclosed publicly. Results of empirical analysis based on a sample of over 3,000 US firms are consistent with the theory and demonstrate that firms’ reporting of low financial performance relative to their industry as well as initiation of new discontinued operations are preceded, and not followed, by unplanned CEO departures.

Delegation Using Forward Induction

This paper explores how delegation can be used as a signal to sustain cooperation. I consider a static principal–agent model with two tasks, one resembling a coordination game. If there is asymmetric information about the agent’s type, the principal with high private belief can delegate the first task as a signal. This is also supported by the forward induction argument. However, in the laboratory setting, this equilibrium is chosen only sometimes. When the subjects have information about past sessions, there is a significant increase in the use of delegation. This finding sheds light on equilibrium selection in Bayesian games.

Analysis of the Brazilian tax incentives to innovation and patent data: a Principal-Agent model approach

We propose to evaluate Lei do Bem (law 11.196/05) for Brazilian regions (North, Northeast, Center-West, Southeast and South). This is the first study that analyzes Lei do Bem using extensive game simulations for the different regions of the country. Based on data from 2006 to 2015, we find moral hazard between government and innovative Brazilian companies, as there was no express incentive in the Lei do Bem to stimulate the industrial sector to innovate and register the innovation as a patent. Thus, policies that review the tax incentives structure contained in the Lei do Bem as well as encourage industries and companies to file patents in public patent databases may have positive effects on the Brazilian innovation system.

Analysis of the Brazilian tax incentives to innovation and patent data: a Principal-Agent model approach

We propose to evaluate Lei do Bem (law 11.196/05) for Brazilian regions (North, Northeast, Center-West, Southeast and South). This is the first study that analyzes Lei do Bem using extensive game simulations for the different regions of the country. Based on data from 2006 to 2015, we find moral hazard between government and innovative Brazilian companies, as there was no express incentive in the Lei do Bem to stimulate the industrial sector to innovate and register the innovation as a patent. Thus, policies that review the tax incentives structure contained in the Lei do Bem as well as encourage industries and companies to file patents in public patent databases may have positive effects on the Brazilian innovation system.

Incentive strategy about technology innovation based on knowledge ecological coupling in strategic emerging industry

PurposeThe purpose of this paper is to solve the problem of low efficiency on knowledge resources allocation in the strategic emerging industry (SEI), an incentive model of technology innovation based on knowledge ecological coupling is designed.Design/methodology/approachFirst, a principal–agent model of knowledge inputs and a knowledge ecological coupling model based on an improved Lotka–Volterra model are constructed. In addition, a numerical example about Chongqing Yongchuan industrial park, the emulation analysis and the associated discussions are conducted to analyze the equilibriums of principal–agent in different knowledge inputs. Further, the paper analyzes the evolutionary equilibrium in knowledge ecological coupling and reveals the dual adjustments of the node organization on knowledge inputs.FindingsThus, this paper shows that by establishing the relationships of knowledge ecological coupling based on “mutualism and commensalism,” node organization raises the level of knowledge inputs; an incentive mode of “knowledge ecological coupling relationship + technology innovation chain” is conductive to substantially improving the efficiency of knowledge resource allocation, and to stimulate the vitality of node organization for technology innovation in the strategic emerging industry (SEI).Originality/valueThis paper contributes to the extant researches in two ways. First, this paper reveals the dual adjustments of the node organizations in inputting knowledge, which broadens the vision and borders of the researches on traditional knowledge management. The methods of the traditional principal–agent model and the knowledge input/output profit model are also expanded. Second, this paper verifies that applying the mode of “knowledge ecological coupling relationship + technology innovation chain” in practice is conducive to enhancing the efficiency of the cross-organizational knowledge allocation in the strategic emerging industry (SEI).

A note on organizational structure and environmental liability

This paper employs a multi-task principal-agent model to examine how a corporation’s organizational structure and liability rules for environmental damages affect the incentive schemes offered to managers. We derive environmental liability rules for risk averse managers under two alternative organizational structures: a product-based organization (PBO) and functional-based organization (FBO). For a PBO, it is shown that efficiency is independent of whether the firm or managers are liable for environmental damages; in a FBO it is optimal either to hold the firm liable for environmental damages or, equivalently, to only hold the environmental managers liable for damages. It is also shown that the two organizational structures are equally efficient when there is no correlation between environmental damages from products and no spillover between managerial effort across products or functions. Numerical results further reveal that beneficial spillovers between functions for the same product favours a PBO over a FBO; beneficial spillovers across functions favours a FBO.