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Microeconomics, Industrial Organization, and Game Theory
Academic Degrees
PhD, Economics, Johns Hopkins University, 1997
MA, Economics, University of Chicago, 1992
BS, Business Administration, University of Missouri-Columbia, 1990
Professional Experience
Associate Professor, Indiana University, 2009-present
Assistant Professor, Indiana University, 2005-2009
Assistant Professor, University of North Dakota, 2003-2005
Lecturer, University of Liverpool, 2001-2003
Lecturer, Brunel University, 1997-2001
Selected Publications
Rauh, M. T. (2020). The Neoclassical Firm Under Moral Hazard. Journal of Industrial Economics, 68(2), 191-225.
Rauh, M. T. (2018). The O‐ring theory of the firm. Journal of Economics and Management Strategy, 27(1), 82-101.
Rauh, M. T. (2014). Incentives, wages, employment, and the division of labor in teams. The RAND Journal of Economics, 45(3), 533-552.
Abstract
We develop a theory of incentives, wages, and employment in the context of team production. A central insight is that specialization and division of labor not only improve productivity but also increase effort and the sensitivity of effort to incentives under moral hazard. We show that employment and incentives are complements for the principal when the positive effects of specialization and division of labor outweigh the increase in risk associated with additional employment and are substitutes otherwise. We provide new characterizations of the partnership, the firm, and the role of the budget-breaker that are quite different from the classical literature.