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ABSTRACTThis study explores the motivational consequences of an incentive device based on standard setting. It is shown that standard setting induces a wealth‐seeking manager to undertake decisions that, in the manager's judgment, will improve the position of the owner relative to implementing the standard. Conditions under which it is rational for the owner to allow the manager to choose and implement decisions are discussed. Finally, consideration is given to an alternative incentive mechanism in which the manager's decisions are manipulated through variation of the incentive mechanism.

Vertical integration is often proposed as a way to resolve hold‐up problems. This ignores the empirical fact that division managers tend to maximize divisional (not firmwide) profit when investing. I develop a model with asymmetric information at the bargaining stage and investment returns taking the form of cash and "empire benefits." Owners of a vertically integrated firm will then provide division managers with low‐powered incentives to induce them to bargain more cooperatively, resulting in higher investments and overall profit as compared with nonintegration. Vertical integration therefore mitigates hold‐up problems even without profit sharing.

Data from a 1984 Dept of Housing & Urban Development study & the 1990 US Census are used to examine whether homelessness is a housing problem per se, along with other issues relating to homelessness. The central conclusion is that homelessness does not appear to be a national housing problem. Also, given untoward incentives among actual & potential homeless populations, policies addressing homelessness should be directed at other instruments of change, eg, mental health funding & expenditures to treat substance abuse. 3 Tables, 16 References. Adapted from the source document.