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The probability that actors in economic relationships break rules increases with the profits they thus expect to earn. It decreases with the probability and level of short- and long-term losses resulting from disclosure. It also decreases with the level of social context factors and intrinsic values which shield actors from yielding to economic temptations. This paper assesses the relative merits of various scientific approaches concerned with risks in economic relationships and outlines their contribution to the study of opportunistic rule-breaking. Since the identification of (misdirected) economic incentives faced by firms and individuals represents the starting point for a systematic analysis of opportunism in any field, we also outline a microeconomic approach that systematically provides this crucial information. The approach is applied to the problem of food quality and safety threatened by opportunistic malpractice of food business operators. Its essentials are illustrated through a study which systematically searches for the temptations to break production-related rules in the poultry industries.

In the present article, Tiebout meets Laffont and Tirole in the land of Fiscal Federalism. We use a non-trivial Principal-Multi-Agent model to characterize the optimal intergovernmental grant schedule, when the cost of local public goods depends on hidden characteristics and actions of local governments, and under citizen free mobility. We show that local governments earn informational rents, and how optimal local taxes, public good production levels and land prices are jointly distorted at the second-best optimum, as a consequence of free mobility and asymmetric information. The effect of informational asymmetries is to decrease the average production of public goods and to increase the inter-jurisdictional variance of taxes and public-good production.

This paper uses a principal-agent model to examine incentive compatibility in the presence of information asymmetry between the government and individual producers. Prior models of livestock disease have not incorporated information asymmetry between livestock managers and social planners. By incorporating the asymmetry, we investigate the role of incentives in producer behavior that influences the duration and magnitude of a disease epidemic.

The paper presents a model of educational production which tries to make sense of recent evidence on effects of institutional arrangements on student performance. In a simple principal-agent framework, students choose their learning effort to maximize their net benefits, while the government chooses educational spending to maximize its net benefits. In the jointly determined equilibrium, schooling quality is shown to depend on several institutionally determined parameters. The impact on student performance of institutions such as central examinations, centralization versus school autonomy, teachers' influence, parental influence, and competition from private schools is analyzed. Furthermore, the model can rationalize why positive resource effects may be lacking in educational production.

Two issues in land tenure contracts in agriculture that have vexed economists are (1) the appearance and co-existence of multiple contracts, often in adjoining plots of land and (2) the choice of a share-cropping contract because a share contract being analogous to a proportional tax, is supposed to distort incentives and lead to sub-optimal use of inputs into land as well as lower levels of investment. In this paper we develop a dynamic two period model of landlord-tenant interaction in a principal-agent framework with one sided private information. The landlord has a choice of three contracts - wage, share and rent and chooses a contract so as to maximize her own pay-off. We show that under certain realistic assumptions (1) multiple contracts can co-exist over time and (2) share-cropping can arise and persist. The driving force in the model is the rate at which the agent discounts the future.