* We are grateful to Ulf Schiller for helpful comments on an earlier version of this paper. We also thank Yanruo Wang for excellent research assistance. Agency theory has for most part focused on the nature and efficiency properties of " complete " incentive contracts. Accordingly, a contract is viewed as a collection of " if-then " statements such that a specific payoff results if a particular...

This paper describes the construction of two scales to measure police attitudes towards the selective enforcement of the law. The Service-Legalistic (S-L) scale measures police discretion along a flexible-inflexible continuum. Service-oriented police advocate the use of discretion to help solve social problems; legalistic police oppose discretion because it interferes with their duty to enforce...

We examine the role of discretion in executive incentive contracts, and explore the trade-offs firms face in choosing among imperfect objective measures of individual performance, more-accurate but non-verifiable subjective measures, and overly broad objective measures of company-wide performance that includes the performance of all agents in the firm. We generate implications and test the mode...

In many markets, it is common for headquarters to create a price list but grant local salespeople discretion to negotiate prices for individual transactions. How much (if any) pricing discretion headquarters should grant is a topic of debate within many firms. We investigate this issue using a unique data set from an indirect lender with local pricing discretion. We estimate that the local sale...