Journal article
The Methodology of Laboratory Markets and Its Implications for Agency Research in Accounting and Auditing
Journal of accounting research, Vol.23(2), pp.753-793
10/01/1985
DOI: 10.2307/2490837
Abstract
A study is undertaken to determine if an elementary equilibrium model of a principal-agent relationship can be operationalized in a laboratory setting. The model is developed under 2 liability rules, a negligence liability rule and a strict liability rule. Equilibrium price and quality predictions are devised for each rule that serve as the basis for conducting the experiments. These equilibrium relationships are tested when the price each principal pays for each agent's services is publicly disclosed and when the price is not publicly disclosed. Participants in the 8 experiments are male and female student volunteers in the College of Business at the University of Iowa, 7 in each experiment. Among the results, it is found that the equilibrium quality of services is the same under both liability rules, as is the expected profit of the agent. The equilibrium price of services is also consistent with the amounts predicted under each rule. These conclusions hold for both disclosure situations.
Details
- Title: Subtitle
- The Methodology of Laboratory Markets and Its Implications for Agency Research in Accounting and Auditing
- Creators
- Douglas V DeJongRobert ForsytheWilfred C Uecker
- Resource Type
- Journal article
- Publication Details
- Journal of accounting research, Vol.23(2), pp.753-793
- DOI
- 10.2307/2490837
- ISSN
- 0021-8456
- eISSN
- 1475-679X
- Publisher
- Blackwell Publishing Ltd
- Language
- English
- Date published
- 10/01/1985
- Academic Unit
- Economics; Accounting
- Record Identifier
- 9984963230402771
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