Knight’s 'Moral Hazard' Theory of Organization

Economic Inquiry, Vol. 25, No. 1, 1987

Posted: 30 Aug 2012

Date Written: January 1987

Abstract

In this paper I suggest that besides Knight's well recognized "uncertainty" explanation of the firm, he had another one. "Moral hazard" is the central feature in the second, largely overlooked theory. I argue, and attempt to document, that this theory is not a chance excursion but is rather quite well developed by Knight.

Suggested Citation

Barzel, Yoram, Knight’s 'Moral Hazard' Theory of Organization (January 1987). Economic Inquiry, Vol. 25, No. 1, 1987, Available at SSRN: https://ssrn.com/abstract=2138467

Yoram Barzel (Contact Author)

University of Washington ( email )

Box 353330
Seattle, WA 98195-3330
United States
206-543-2510 (Phone)
206-685-7477 (Fax)

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