9453382 STOLE This award provides support to Dr. Lars Stole under the National Science Foundation's Presidential Faculty Fellows (PFF) Program. The PFF Program was established at the request of the President of the United States to recognize and support the scholarly activities of some of the Nation's most outstanding science and engineering faculty members early in their careers. Awards are intended to allow Fellows to undertake self-designed, innovative research and teaching projects, to establish research and teaching programs, and to pursue other academic related activities. This award will allow the investigator to pursue his research agenda of understanding incentives within and between economic organizations. Two separate fields of inquiry, the economic theory of contracts and the economics of industrial organizations, contribute to our present understanding of internal and external organization (and the nexus of interactions between them). Dr. Stole will bring both of these literatures together to bear upon the problem of economic organization. In particular, he will construct new theories to understand the incentive and welfare implications of (1) competitive externalities across bilateral agency relationships; and (2) the internal multilateral organization of the firm. In the first, the goal is to extend the design paradigm of contract theory to multiple principal settings, and then use the methodology to understand competitive environments. In the second, the goal is to determine incentive effects of organizational design and intrafirm input markets. This research addresses important issues relating to contractual interactions within organizations and between as well as insider/outsider theories of unemployment. As an economist in the School of Business, Dr. Stole has been very successful in imparting the insights of microeconomics to MBA students, making economics accessible and useful for practicing professionals, as well as in training doctoral students in economics. This five year award will enable him to continue his important research as well as to train students in his interdisciplinary work spanning economics, business, law, and political science.
