Econ professor in top accounting journal

Professor Peter Bogetoft from Department of Economics has a new top-journal paper. The paper Procurement with Asymmetric Information about Fixed and Variable Costs, has just been published in Journal of Accounting Research, one of a selective few so-called J4* top-journals. The paper, which is co-authored by Rick Antle from Yale University, investigates optimal resource rationing and organizational slack when a principal procures from an agent with private information about fixed and variable costs. The study show how the cost of rationing increases with the variability of production over time. If production levels are increasing (decreasing), the principal will be cautious when eliminating types with low variable (fixed) costs in Period 1, since these types are particularly profitable in Period 2. When production is more stable over time, harsher rationing can be applied in Period 1, followed by less-harsh rationing, if any, in Period 2.