Books From University Presses

Economics has much to do with incentives--not least, incentives to work hard, to produce quality products, to study, to invest, and to save. Although Adam Smith amply confirmed this more than two hundred years ago in his analysis of sharecropping contracts, only in recent decades has a theory begun to emerge to place the topic at the heart of economic thinking. In this book, Jean-Jacques Laffont and David Martimort present the most thorough yet accessible introduction to incentives theory to date. Central to this theory is a simple question as pivotal to modern-day management as it is to economics What makes people act in a particular way in an economic or business situation? In seeking an answer, the authors provide the methodological tools to design institutions that can ensure good incentives for economic agents.This book focuses on the principal-agent model, the "simple" situation where a principal, or company, delegates a task to a single agent through a contract--the essence of management and contract theory. How does the owner or manager of a firm align the objectives of its various members to maximize profits? Following a brief historical overview showing how the problem of incentives has come to the fore in the past two centuries, the authors devote the bulk of their work to exploring principal-agent models and various extensions thereof in light of three types of information adverse selection, moral hazard, and non-verifiability. Offering an unprecedented look at a subject vital to industrial organization, labor economics, and behavioral economics, this book is set to become the definitive resource for students, researchers, and others who might find themselves pondering what contracts, and the incentives they embody, are really all about.

This book develops an original theory of group and organizational behavior that cuts across disciplinary lines and illustrates the theory with empirical and historical studies of particular organizations. Applying economic analysis to the subjects of the political scientist, sociologist, and economist, Mancur Olson examines the extent to which the individuals that share a common interest find it in their individual interest to bear the costs of the organizational effort.The theory shows that most organizations produce what the economist calls “public goods”―goods or services that are available to every member, whether or not he has borne any of the costs of providing them. Economists have long understood that defense, law, and order were public goods that could not be marketed to individuals, and that taxation was necessary. They have not, however, taken account of the fact that private as well as governmental organizations produce public goods.The services the labor union provides for the worker it represents, or the benefits a lobby obtains for the group it represents, are public they automatically go to every individual in the group, whether or not he helped bear the costs. It follows that, just as governments require compulsory taxation, many large private organizations require special (and sometimes coercive) devices to obtain the resources they need. This is not true of smaller organizations for, as this book shows, small and large organizations support themselves in entirely different ways. The theory indicates that, though small groups can act to further their interest much more easily than large ones, they will tend to devote too few resources to the satisfaction of their common interests, and that there is a surprising tendency for the “lesser” members of the small group to exploit the “greater” members by making them bear a disproportionate share of the burden of any group action.All of the theory in the book is in Chapter 1; the remaining chapters contain empirical and historical evidence of the theory’s relevance to labor unions, pressure groups, corporations, and Marxian class action.

Work and Politics develops a historical and comparative sociology of workplace relations in industrial capitalist societies. Professor Sabel argues that the system of mass production using specialized machines and mostly unskilled workers was the result of the distribution of power and wealth in eighteenth- and nineteenth-century Great Britain and the United States, not of an inexorable logic of technological advance. Once in place, this system created the need for workers with systematically different ideas about the acquisition of skill and the desirability of long-term employment. Professor Sabel shows how capitalists have played on naturally existing division in the workforce in order to match workers with diverse ambitions to jobs in different parts of the labor market. But he also demonstrates the limits, different from work group to work group, of these forms of collaboration.

Why did the size of the U.S. economy increase by 3 percent on one day in mid-2013--or Ghana's balloon by 60 percent overnight in 2010? Why did the U.K. financial industry show its fastest expansion ever at the end of 2008--just as the world's financial system went into meltdown? And why was Greece's chief statistician charged with treason in 2013 for apparently doing nothing more than trying to accurately report the size of his country's economy? The answers to all these questions lie in the way we define and measure national economies around the world: Gross Domestic Product. This entertaining and informative book tells the story of GDP, making sense of a statistic that appears constantly in the news, business, and politics, and that seems to rule our lives--but that hardly anyone actually understands.Diane Coyle traces the history of this artificial, abstract, complex, but exceedingly important statistic from its eighteenth- and nineteenth-century precursors through its invention in the 1940s and its postwar golden age, and then through the Great Crash up to today. The reader learns why this standard measure of the size of a country's economy was invented, how it has changed over the decades, and what its strengths and weaknesses are. The book explains why even small changes in GDP can decide elections, influence major political decisions, and determine whether countries can keep borrowing or be thrown into recession. The book ends by making the case that GDP was a good measure for the twentieth century but is increasingly inappropriate for a twenty-first-century economy driven by innovation, services, and intangible goods.

This book, by a distinguished Japanese economist now resident in the West, offers a new interpretation of the current success of the Japanese economy. By placing the rise of Japan in the context of its historical development, Michio Morishima shows how a strongly-held national ethos has interacted with religious, social and technological ideas imported from elsewhere to produce highly distinctive cultural traits. While Professor Morishima traces the roots of modern Japan back as far as the introduction of Confucianism, Taoism and Buddhism from China in the sixth century, he concentrates his observations on the last 120 years during which Japan has had extensive contacts with the West. He describes the swift rise of Japan to the status of a first-rate power following the Meiji Revolution after 1867, in which Japan broke with a long history of isolationism, and which paved the way for the adoption of Western technology and the creation of a modern Western-style nation state; and a similarly meteoric rise from the devastation of the Second World War to Japan's present position. A range of factors in Japan's economic success are analysed: her characteristic dualistic social structure - corresponding to the divide between large and medium/small enterprises - the relations of government and big business, the poor reception of liberalism and individualism, and the strength of the Japanese nationalism. Throughout, Professor Morishima emphasises the importance of the role played in the creation of Japanese capitalism by ethical doctrines as transformed under Japanese conditions, especially the Japanese Confucian tradition of complete loyalty to the firm and to the state. This account, which makes clear the extent to which the economic rise of Japan is due to factors unique to its historical traditions, will be of interest to a wide general readership as well as to students of Japan and its history.