OPTIMAL SEARCH 559
Optimal Stopping 559
Optimal Sequential Decisions 562
THE VALUE OF ADDITIONAL ALTERNATIVES 563
Simultaneous Search 563CHAPTER 14 Asymmetric Information and
Organizational Design 581
ASYMMETRIC INFORMATION 582
Adverse Selection 582
Signaling 585
Principals, Agents, and Moral Hazard 587
ORGANIZATIONAL DESIGN 593
The Nature of the Firm 594
The Boundaries of the Firm 595
Assigning Decision-Making Responsibilities 596
Monitoring and Rewarding Performance 602
Separation of Ownership and Control in the
Modern Corporation 609
APPENDIX TO CHAPTER 14:
A PRINCIPAL-AGENT MODEL 626CHAPTER 15 Bargaining and Negotiation 630
THE ECONOMIC SOURCES OF
BENEFICIAL AGREEMENTS 631
Resolving Disputes 634
Differences in Values 636
Contingent Contracts 639
MULTIPLE-ISSUE NEGOTIATIONS 640
Continuous Variables 646
NEGOTIATION STRATEGY 648
Perfect Information 649
Imperfect Information 650
Repetition and Reputation 652CHAPTER 16 Auctions and Competitive Bidding 668
THE ADVANTAGES OF AUCTIONS 670
BIDDER STRATEGIES 674
English and Dutch Auctions 674
Sealed-Bid Auctions 677
Common Values and the Winner’s Curse 685
OPTIMAL AUCTIONS 687
Expected Auction Revenue 687
Competitive Procurement 693xx ContentsFM.qxd 9/26/11 11:01 AM Page xx