Multi-tier economic hierarchies : existence structure and optimal incentives

Modern corporations are often organised as multi-tier hierarchies, rather than a set of two tier hierarchies. Existing economic theory of contract and the theory of the firm do not provide satisfactory answers to why this is the case. Issues such as the optimal organization of multi-tier hierarchies and optimal hierarchical incentives have not been addressed satisfactorily. This project aims at providing formal theories of multi-tier hierarchies using the framework of contract theory and mechanism design. This project will enhance our understanding of more realistic, hence more complicated economic organisations, as well as making significant contributions to the theory of the firm.