Decision Making & Negotiations

Most U.S. corporations choose their fiscal years to coincide with the calendar year. We document that the larger the firm, the more likely it is to begin its fiscal year in January. This finding holds across industries.

A bilateral moral-hazard problem provides a rationale for "up-or-out" employment contracts. The employer sets a wage higher than opportunity cost to induce the worker to invest in firm-specific capital. If the individual does not make the grade, it is in the firm's interest ex post to fire him. Had the initial arrangement not included provisions for firing individuals, the firm would underreport the value of the employee, wrecking the incentive scheme. The basic model permits both firm and worker to be risk neutral.

This paper considers an M/G/c queueing system serving a finite number (J) of distinct customer classes. Performance of the system, as measured by the vector of steady-state expected waiting times of the customer classes (the performance vector), may be controlled by adopting an appropriate priority discipline.

This paper presents a strategic theory of contract renegotiation. In this theory, suboptimal contracts are put in place initially to protect one party against undesirable actions by another party and are renegotiated once the danger is past. We develop a model to establish the cases in which simple contracts cannot achieve desirable outcomes, so that only a complicated contract or renegotiation will serve. Unlike most previous accounts of contract renegotiation, this theory does not rely on exogenous uncertainty to motive renegotiation.

This paper considers general (single facility) queueing systems with exponential service times, dealing with a finite number J of distinct customer classes. Performance of the system, as measured by the vector of steady state expected sojourn times of the customer classes (the performance vector) may be controlled by adopting an appropriate preemptive priority discipline.

We present an exact solution method for a single-server queueing system which alternates between periods in which service can be provided (on-periods) and periods in which the server is out of operation (off-periods). The arrival process is Poisson, on-periods are assumed to have a phase-type distribution, and service times and off-periods are assumed to be arbitrary.

We consider the polymatroidal flow network model which incorporates two important extensions of the standard maximal flow problem: general concave objective functions of the vector of supplies to a collection of sinks, as well as polymatroidal capacity restrictions on sets of arcs emanating from or pointing to a common node. A number of important applications are reviewed.