Firms

October 15, 2014 — June 15, 2020

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Suspiciously similar content

Why do firms exist, not just single agents? Why do they exhibit a Zipf(ish) distribution? Why isn’t there (yet) a single monopoly owning the entire economy? Why are they structured like they are? Are they proto-AIs?

Kevin Bryan on Jean Tirole

Since the only part of the indescribable state I care about is the part that affects my payoffs, we are essentially done: no matter how many v and c’s there could be in the future, as long as I can write a contract specifying how we each get other to truthfully say what those parameters are, this indescribability doesn’t matter.

Whoa. That is a very, very, very clever insight. Frankly, it is convincing enough that the only role left for property rights theories of the firm are some kind of behavioural theory which restricts even contracts of the Maskin-Tirole sense — and since these contracts are quite a bit simpler in some way than the hundreds of pages of legalese which we see in a lot of real-world contracts on important issues, it’s not clear that bounded rationality or similar theories will get us far.

I cannot help but feel that Keith Devlin’s History of double entry bookkeeping pertains in some way.

1 Incoming

Firm Inefficiency - by Robin Hanson

2 References

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Clauset, Shalizi, and Newman. 2009. “Power-Law Distributions in Empirical Data.” SIAM Review.

Farrell. 2012. The Political Economy of Trust: Institutions, Interests, and Inter-Firm Cooperation in Italy and Germany.

Goddard, Liu, McKillop, et al. 2012. “On the Size Distribution of Financial Institutions.” SSRN Scholarly Paper ID 1940220.

Gonza, and Ellerman. 2019. “Worker Ownership and the Current Crisis.” In Sukobi.stabilnost.demokratija?

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Palladino. 2019. “RIP Shareholder Primacy.” Text. Boston Review.

Saichev, A., Malevergne, and Sornette. 2008. “Theory of Zipf’s Law and of General Power Law Distributions with Gibrat’s Law of Proportional Growth.” arXiv:0808.1828 [Physics, q-Fin].

Saichev, Alexander I., Malevergne, and Sornette. 2010. Theory of Zipf’s Law and Beyond.

Simon, Herbert A. 1955. “On a Class of Skew Distribution Functions.” Biometrika.

———. 1960. “Some Further Notes on a Class of Skew Distribution Functions.” Information and Control.

Simon, Herbert A, and Bonini. 1958. “The Size Distribution of Business Firms.” The American Economic Review.

Wilson, Borovitskiy, Terenin, et al. 2020. “Efficiently Sampling Functions from Gaussian Process Posteriors.” In Proceedings of the 37th International Conference on Machine Learning.

Yanagita, and Onozaki. 2008. “Dynamics of a Market with Heterogeneous Learning Agents.” Journal of Economic Interaction and Coordination.

Zingales. 2017. “Towards a Political Theory of the Firm.” Journal of Economic Perspectives.