Three Essays In Governance And Banking

(Cont.) The third essay (joint with Daron Acemoglu and Michael Kremer) presents a theoretical analysis of the relative merits of markets, firms, and governments in environments where high powered incentives have both costs and benefits. Firms obscure information about workers' output, thus flattening incentives, and improving efficiency over markets. However in some cases, most notably under common shocks, firms are unable to commit to such a strategy. Under these circumstances, Governments may be able to commit to much flatter wage schedules, and improve the allocation of resources.