Theory and Decision

, Volume 74, Issue 2, pp 219–239

The irreversibility effect and agency conflicts

Authors

  • Clemens Löffler
    • Department of Business AdministrationUniversity of Vienna
    • Department of Business AdministrationUniversity of Vienna
  • Georg Schneider
    • Department of Taxation, Accounting and FinanceUniversity of Paderborn
Article

DOI: 10.1007/s11238-012-9331-6

Cite this article as:
Löffler, C., Pfeiffer, T. & Schneider, G. Theory Decis (2013) 74: 219. doi:10.1007/s11238-012-9331-6

Abstract

This paper studies the influence of agency conflicts on the irreversibility effect. Using a dynamic variant of the static Baron and Myerson (Econometrica 50(4):911–930, 1982) adverse selection model, we characterize under which circumstances the irreversibility effect arises in the presence and absence of an agency conflict. In particular, we find that in the presence of an agency conflict the irreversibility effect arises in more circumstances than in the standard first-best analysis that abstracts from agency problems.

Keywords

Irreversibility effectIrreversible decisionsUncertaintyAgency conflicts
Download to read the full article text

Copyright information

© Springer Science+Business Media New York 2012