<%@LANGUAGE="VBSCRIPT" CODEPAGE="1252"%> M Meyer Publications

Publications

Increasing Interdependence in Multivariate Distributions
with Bruno Strulovici
Journal of Economic Theory, (2012), 147, pp. 1460-1489.
Abstract Paper Supplementary Material.

Performance Comparisons and Dynamic Incentives
with John Vickers
Journal of Political Economy, (1997), 105 (3), pp.547-581.
Reprinted in The Economics of Organization and Bureaucracy (The International Library of Critical Writings in Economics Series), P.M. Jackson (ed.), Cheltenham, U.K., and Northampton, Mass.: Edward Elgar Publishing, 2013.

Limited Intertemporal Commitment and Job Design
with Trond E. Olsen and Gaute Torsvik
Journal of Economic Behavior & Organization, (1996), 31, pp.401-417.

Cooperation and Competition in Organizations: A Dynamic Perspective
European Economic Review, (1995), 39, 709-722.

The Dynamics of Learning with Team Production: Implications for Task Assignment
The Quarterly Journal of Economics, (1994), 109, (4), pp.1157-1184.
Reprinted in Personnel Economics (The International Library of Critical Writings in Economics Series), E. P. Lazear and R. McNabb (eds.), Cheltenham, U.K., and Northampton, Mass.: Edward Elgar Publishing, 2004.

Organizational Prospects, Influence Costs, and Ownership Changes
with Paul Milgrom and John Roberts
Journal of Economics & Management Strategy, (1992), 1, (1), pp.9-35.
Abstract Paper

Biased Contests and Moral Hazard: Implications for Career Profiles
Annales d'Économie et de Statistique, (1992), 25/26, pp.165-187.
Abstract Paper

Learning from Coarse Information: Biased Contests and Career Profiles
Review of Economic Studies, (1991), 58, pp.15-41.

Supply Function Equilibria in Oligopoly under Uncertainty
with Paul Klemperer
Econometrica, (1989), 57, (6), pp.1243-1277.
Reprinted in The Economic Theory of Auctions (The International Library of Critical Writings in Economics Series), P. D. Klemperer (ed.), Cheltenham, U.K., and Northampton, Mass.: Edward Elgar Publishing, 2000.

Consistent Conjectures Equilibria: A Reformulation Showing Non-Uniqueness
with Paul Klemperer
Economics Letters, (1988), 27, pp.111-115.

Labor Contracts under Asymmetric Information when Workers are Free to Quit
Quarterly Journal of Economics, (1987), 102, (3), pp.527-551.

Incentives, Compensation, and Social Welfare
with Dilip Mookherjee
Review of Economic Studies, (1987), 45, (2), pp.209-226.
Abstract Paper

Price Competition vs. Quantity Competition: The Role of Uncertainty
with Paul Klemperer
Rand Journal of Economics, (1986), 17, (4), pp.618-638.
Reprinted in Cournot Oligopoly: Characterization and Applications, A. Daughety (ed.), Cambridge: Cambridge University Press, 1988.

Asymmetric Information and Labor Contracts: A Survey
Revista Española de Economia, (1985), 2, (2), pp.347-364.

Abstracts

Increasing Interdependence of Multivariate Distributions
with Bruno Strulovici
Journal of Economic Theory, (2012), 147, pp. 1460-1489.
Orderings of interdependence are useful in many economic contexts: in assessing ex post inequality under uncertainty; in comparing multidimensional inequality; in valuing portfolios of assets or insurance policies; and in assessing systemic risk. We explore five orderings of interdependence for multivariate distributions: greater weak association, the supermodular ordering, the convex-modular ordering, the dispersion ordering, and the concordance ordering. For two dimensions, all five are equivalent, whereas for three dimensions, the first four are strictly ranked and the last two are equivalent, and for four or more dimensions, all five are strictly ranked. For the special case of binary random variables, we establish some equivalences among the orderings.
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Performance Comparisons and Dynamic Incentives
with John Vickers
Journal of Political Economy, (1997), 105 (3), pp.547-581.
It is well known that comparative performance information (CPI) can enhance efficiency in static principal-agent relationships by improving the trade-off between insurance and incentives in the design of explicit contracts. In dynamic settings, however, there may be implicit as well as explicit incentives, for example, managerial career concerns and the ratchet effect in regulation. We show that the dynamic effects of CPI on implicit incentives can either reinforce or oppose the familiar (static) insurance effect and in either case can be more important for efficiency. The overall welfare effects of CPI are thus ambiguous and can be characterized in terms of the underlying information structure.
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Limited Intertemporal Commitment and Job Design
with Trond E. Olsen and Gaute Torsvik
Journal of Economic Behavior & Organization, (1996), 31, pp.401-417.
The paper shows that some of the guidelines for job design that emerge from a static analysis of the multitask agency problem can be overturned in a dynamic model with limited commitment. Static analyses have shown that it is optimal to assign workers sole responsibility for tasks, and to allocate them tasks which are as homogeneous as possible with respect to the ease of measuring performance. Our dynamic analysis demonstrates that it can, instead, be optimal to make workers jointly responsible for tasks, and to make their task portfolios as similar to one another, but as internally diverse, as possible.
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Cooperation and Competition in Organizations: A Dynamic Perspective
European Economic Review, (1995), 39, 709-722.
In static principal-agent relationships, cooperation and competition among agents both yield higher welfare than independent compensation – both modes of job design improve the tradeoff between risk and explicit incentives. In dynamic settings, welfare is also affected by implicit incentives, in particular, the ratchet effect. I characterize the effects of job design decisions on implicit incentives, showing that they differ in nature from explicit incentive effects and may be the dominant ones. Even if a decision about job design improves the static risk/incentive tradeoff, it may worsen the ratchet effect by so much that welfare falls.
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The Dynamics of Learning with Team Production: Implications for Task Assignment
The Quarterly Journal of Economics, (1994), 109, (4), pp.1157-1184.
We analyze optimal task assignment when a firm needs to learn the abilities of employees. When projects require collaboration between juniors and seniors and only team outputs are observable, having juniors divide their time between two projects ("junior sharing") is less informative about their abilities, but more informative about their senior teammates' abilities, than having juniors devote all their time to a single project ("no sharing"). In an overlapping-generations model, we show that no sharing is more (less) attractive than junior sharing if the prior uncertainty about abilities is small (large) relative to exogenous shocks to team production.
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Organizational Prospects, Influence Costs, and Ownership Changes
with Paul Milgrom and John Roberts
Journal of Economics & Management Strategy, (1992), 1, (1), pp.9-35.
We augment efficiency-based theories of ownership by including influence costs. Our principal conclusion is that the prospect of organizational decline and layoffs creates additional influence costs in multiunit organizations that would be absent if there was no prospect of layoffs and would be lessened or eliminated in focused organizations. This helps explain the tendency of firms to divest poorly performing units, as well as the pattern of sales of such units to firms already in businesses related to that of the divested unit.
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Biased Contests and Moral Hazard: Implications for Career Profiles
Annales d'Économie et de Statistique, (1992), 25/26, pp.165-187.
We study the design of a sequence of two contests between a pair of identical risk averse employees whose effort choices are private information. It is optimal for the organization to "bias" the second contest in favor of the early winner—the reduction in second-period incentives is outweighed by the increase in first-period incentives. Thus, even though first-period success reflects only transitory shocks and not ability, it is efficient to structure the contests so these shocks have persistent effects on employees' careers.
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Learning from Coarse Information: Biased Contests and Career Profiles
Review of Economic Studies, (1991), 58, pp.15-41.
An organization's promotion decision between two workers in modelled as a problem of boundedly-rational learning about ability. The decision-maker can bias noisy rank-order contests sequentially, thereby changing the information they convey. The optimal final-period bias favours the "leader", reinforcing his likely ability advantage. When optimally biased rank-order information is a sufficient statistic for cardinal information, the leader is favoured in every period. In other environments, bias in early periods may (i) favour the early loser, (ii) be optimal even when the workers are equally rated, and (iii) reduce the favoured worker's promotion chances.
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Supply Function Equilibria in Oligopoly under Uncertainty
with Paul Klemperer
Econometrica, (1989), 57, (6), pp.1243-1277.
We model an oligopoly facing uncertain demand in which each firm chooses as its strategy a "supply function" relating its quantity to its price. Such a strategy allows a firm to adapt better to the uncertain environment than either setting a fixed price or setting a fixed quantity; commitment to a supply function may be accomplished in practice by the choice of the firm's size and structure, its culture and values, and the incentive systems and decision rules for its employees. In the absence of uncertainty, there exists an enormous multiplicity of equilibria in supply functions, but uncertainty, by forcing each firm's supply function to be optimal against a range of possible residual demand curves, dramatically reduces the set of equilibria. Under uncertainty, we prove the existence of a Nash equilibrium in supply functions for a symmetric oligopoly producing a homogeneous good and give sufficient conditions for uniqueness. We perform comparative statics with respect to firms' costs, the industry demand, the nature of the demand uncertainty, and the number of firms, and sketch the extension to differentiated products. Firms' equilibrium supply functions are steeper with marginal cost curves that are steeper relative to demand, fewer firms, more highly differentiated products, and demand uncertainty that is relatively greater at higher prices. The steeper are the supply functions firms choose in equilibrium, the more closely competition resembles the Cournot model (which exogenously imposes vertical supply functions—fixed quantities); with flatter equilibrium supply functions, competition is closer to the Bertrand model (which exogenously imposes horizontal supply functions—fixed prices).
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Consistent Conjectures Equilibria: A Reformulation Showing Non-Uniqueness
with Paul Klemperer
Economics Letters, (1988), 27, pp.111-115.
We interpret both Bresnahan's original (1981) definition of consistent conjectures equilibria and his generalized (1983) definition as dominant strategy equilibria in reaction functions. We employ a simple constructive argument to show that every outcome satisfies the generalized definition.
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Labor Contracts under Asymmetric Information when Workers are Free to Quit
Quarterly Journal of Economics, (1987), 102, (3), pp.527-551.
This paper examines the impact of workers' ability to quit on the performance of labor contracts between workers and privately informed firms. While the need to induce workers to remain with the firm necessarily lowers total welfare, the effect on employment levels is to reduce the magnitude of the inefficiency due to asymmetric information, whether this inefficiency is under- or overemployment. The model predicts that employment distortions increase with the strength of lock-in effects on workers, a prediction which contrasts with the results of efficiency wage models and which may help in empirical testing of labor contract theory.
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Incentives, Compensation, and Social Welfare
with Dilip Mookherjee
Review of Economic Studies, (1987), 45, (2), pp.209-226.
Alternative wage structures under conditions of moral hazard are analysed from a social welfare standpoint. It is argued that ex post equity judgements in an uncertainty context should incorporate a preference for "positive correlation" of utilities of different individuals. In the design of compensation schemes, this may give rise to a conflict between ex post equity objectives and the need to provide effort incentives: relative performance clauses in compensation schemes that are useful for providing incentives are undesirable from an ex post equity standpoint. This is demonstrated by showing (a) in the a context of independent production uncertainties, every rank-order tournament is welfare-dominated by a set of independent (randomized) contracts, and (b) welfare-optimal compensation schemes in general depend separately on an equity and an incentive component that tend to correlate agent compensations in different directions.
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Price Competition vs. Quantity Competition: The Role of Uncertainty
with Paul Klemperer
Rand Journal of Economics, (1986), 17, (4), pp.618-638.
We analyze the Nash equilibria of a one-stage game in which the nature of the strategic variables (prices or quantities) is determined endogenously. Duopolists producing differentiated products simultaneously choose either a quantity to produce or a price to charge. In the absence of exogenous uncertainty, there exist four types of equilibria with differing levels of output: (price, price), (quantity, quantity), (price, quantity), and (quantity, price). The multiplicity of equilibria stems from each firm's indifference between setting price and quantity, given its conjecture about its rival's strategy. But exogenous uncertainty about market demands, which makes firms uncertain about their residual demands, even in equilibrium, gives firms strict preferences between setting price and quantity. As a result, the number of equilibria is reduced. When uncertainty is exogenous, we analyze the effect of the slope of marginal costs, the nature of the demand disturbance, and the curvature of demand on firms' propensities to compete with price or quantity as the strategic variable. These three factors are likely to influence the nature and intensity of oligopolistic competition.
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Asymmetric Information and Labor Contracts: A Survey
Revista Española de Economia, (1985), 2, (2), pp.347-364.
This paper surveys models of optimal labor contracts between risk averse workers and privately informed firms. We analyze the inefficiencies resulting from the conflict between the provision of incentives for the firm and risk sharing considerations. We show that limitations on the firm's (or its manager's) ability to absorb risk move the second-best contract outcome toward underemployment, while an income effect on the worker's demand for leisure is a force toward overemployment. The survey concludes by discussing models of the aggregate consequences of labor allocation through contracts constrained by asymmetric information.
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