A Perspective on Asymmetric Information, Incentives and Intrafirm Resource Allocation

Management Science, Forthcoming

Posted: 19 Jul 2004

See all articles by Madhav V. Rajan

Madhav V. Rajan

Booth School of Business, University of Chicago

Stefan J. Reichelstein

Stanford University - Stanford Graduate School of Business; CESifo (Center for Economic Studies and Ifo Institute)

Abstract

The paper Asymmetric Information, Incentives and Intrafirm Resource Allocation, by Harris, Kriebel and Raviv (H.K.R.), was published in the June 1982 issue of Management Science. In this article, written as part of this journal's 50-year anniversary celebration, we highlight the significance of H.K.R.'s paper for research in managerial accounting. We first formulate and solve a continuous version of H.K.R.'s model in order to illustrate the key assumptions and findings of their paper. We then review several strands of the resource allocation literature in managerial accounting that have taken their inspiration, either directly or indirectly, from the work of H.K.R.

Keywords: Intrafirm resource allocation, Managerial Incentives, Asymmetric Information

JEL Classification: D82, M40, M46

Suggested Citation

Rajan, Madhav V. and Reichelstein, Stefan J., A Perspective on Asymmetric Information, Incentives and Intrafirm Resource Allocation. Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=565522

Madhav V. Rajan

Booth School of Business, University of Chicago

1101 East 58th Street
Chicago, IL 60637-1561
United States

Stefan J. Reichelstein (Contact Author)

Stanford University - Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-736-1129 (Phone)
650-725-7979 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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