9781118041581

Summary 577 the time, average managers 60 percent of the time, and inferior managers just 50 percent of the time. At the risk of ...

578 Chapter 13 The Value of Information Suggested References Borison, A., and G. Hamm. “How to Manage Risk (after Risk Managemen ...

Summary 579 Lawrence, D. B. The Economic Value of Information.New York: Springer-Verlag, 1999. Salop, S. C. “Evaluating Uncertai ...

580 Chapter 13 The Value of Information A distribution between $46 and $70 has noeffect on the optimal number of buyers. The ma ...

Beginning in January 1989, DuPont’s fiber division began an experiment in incentive pay of unprecedented scope for a company of ...

12 percent more than his or her counterpart (for a third-year wage of about $63,000) if the division achieved 150 percent or mor ...

Asymmetric Information 583 for its employees and their spouses. Employees who elect this coverage pay more than with the standar ...

comes from adverse selection. A typical buyer of used cars considers, “What kinds of used cars would sellers most likely offer f ...

Asymmetric Information 585 Adverse selection also operates in health insurance markets. For many of the elderly, medical insuran ...

An alternative method is to offer guarantees or warranties. A warranty serves two related purposes. First, it protects customers ...

Asymmetric Information 587 educational attainment serves as an important signal, distinguishing persons of different productivit ...

that this estimate is highly uncertain; final cost could well be as low as $6 mil- lion or as high as $7.5 million. Recognizing ...

Asymmetric Information 589 The United States offers some of the most sophisticated health and hospital care in the world. Howeve ...

forward to future years. Thus workers, in their medical and health care deci- sions, should begin acting as if they are spending ...

Asymmetric Information 591 Consider the home lending market where some of the worst abuses occurred.^10 Thirty years ago, most h ...

The unwinding of the financial meltdown revived the specter of “too big to fail.” Under this doctrine, some major financial inst ...

Organizational Design 593 case, these firms have every incentive to expend excessive hours on the con- tracted tasks. After all, ...

What can economic analysis say about the likely ways in which firms are organ- ized? This section considers each of these questi ...

Organizational Design 595 The large-scale firm presents an interesting and important trade-off. On the one hand, increases in sc ...

Empirical studies bear this out. A study of the Japanese automobile indus- try found that the more specialized and interdependen ...