Incentives, opportunism and behavioral uncertainty in electricity industries

Eva Niesten, Albert Jolink

Research output: Contribution to journalArticle

12 Citations (Scopus)

Abstract

Many theories on the economics of the firm assume that economic actors are opportunistic. The focus of these theories is on the mitigation of the uncertainty that economic actors may behave opportunistically, and on the ability of contracts and governance structures to reduce this behavioral uncertainty. Previous studies did not analyze the properties of behavioral uncertainty in detail, nor did they emphasize the empirical verification of behavioral uncertainty with revealed opportunistic behavior. This article addresses both of these lacunae in the literature by focusing on incentive alignment between parties to information transactions and on empirical proof of opportunistic behavior. When a context aligns incentives, contracting parties do not behave opportunistically. When a context does not align incentives, contracting parties strategically distort or disguise information. A study of 239 regulatory decisions on dispute resolutions and enforcements of energy laws in the Dutch and French electricity industries confirms these propositions.

Original languageEnglish
Pages (from-to)1031-1039
Number of pages9
JournalJournal of Business Research
Volume65
Issue number7
Early online date15 Apr 2011
DOIs
Publication statusPublished - Jul 2012
Externally publishedYes

Fingerprint

Uncertainty
Electricity industry
Incentives
Opportunism
Opportunistic behavior
Economics
Contracting
Energy
Enforcement
Dispute resolution
Mitigation
Incentive alignment
Economic uncertainty
Governance structure

Keywords

  • Behavioral uncertainty
  • Energy firms
  • Incentive alignment
  • Revealed opportunism

ASJC Scopus subject areas

  • Marketing

Cite this

Incentives, opportunism and behavioral uncertainty in electricity industries. / Niesten, Eva; Jolink, Albert.

In: Journal of Business Research, Vol. 65, No. 7, 07.2012, p. 1031-1039.

Research output: Contribution to journalArticle

Niesten, Eva ; Jolink, Albert. / Incentives, opportunism and behavioral uncertainty in electricity industries. In: Journal of Business Research. 2012 ; Vol. 65, No. 7. pp. 1031-1039.
@article{f452bc0c53ac45feb3a1e1feccece985,
title = "Incentives, opportunism and behavioral uncertainty in electricity industries",
abstract = "Many theories on the economics of the firm assume that economic actors are opportunistic. The focus of these theories is on the mitigation of the uncertainty that economic actors may behave opportunistically, and on the ability of contracts and governance structures to reduce this behavioral uncertainty. Previous studies did not analyze the properties of behavioral uncertainty in detail, nor did they emphasize the empirical verification of behavioral uncertainty with revealed opportunistic behavior. This article addresses both of these lacunae in the literature by focusing on incentive alignment between parties to information transactions and on empirical proof of opportunistic behavior. When a context aligns incentives, contracting parties do not behave opportunistically. When a context does not align incentives, contracting parties strategically distort or disguise information. A study of 239 regulatory decisions on dispute resolutions and enforcements of energy laws in the Dutch and French electricity industries confirms these propositions.",
keywords = "Behavioral uncertainty, Energy firms, Incentive alignment, Revealed opportunism",
author = "Eva Niesten and Albert Jolink",
year = "2012",
month = "7",
doi = "10.1016/j.jbusres.2011.03.012",
language = "English",
volume = "65",
pages = "1031--1039",
journal = "Journal of Business Research",
issn = "0148-2963",
publisher = "Elsevier",
number = "7",

}

TY - JOUR

T1 - Incentives, opportunism and behavioral uncertainty in electricity industries

AU - Niesten, Eva

AU - Jolink, Albert

PY - 2012/7

Y1 - 2012/7

N2 - Many theories on the economics of the firm assume that economic actors are opportunistic. The focus of these theories is on the mitigation of the uncertainty that economic actors may behave opportunistically, and on the ability of contracts and governance structures to reduce this behavioral uncertainty. Previous studies did not analyze the properties of behavioral uncertainty in detail, nor did they emphasize the empirical verification of behavioral uncertainty with revealed opportunistic behavior. This article addresses both of these lacunae in the literature by focusing on incentive alignment between parties to information transactions and on empirical proof of opportunistic behavior. When a context aligns incentives, contracting parties do not behave opportunistically. When a context does not align incentives, contracting parties strategically distort or disguise information. A study of 239 regulatory decisions on dispute resolutions and enforcements of energy laws in the Dutch and French electricity industries confirms these propositions.

AB - Many theories on the economics of the firm assume that economic actors are opportunistic. The focus of these theories is on the mitigation of the uncertainty that economic actors may behave opportunistically, and on the ability of contracts and governance structures to reduce this behavioral uncertainty. Previous studies did not analyze the properties of behavioral uncertainty in detail, nor did they emphasize the empirical verification of behavioral uncertainty with revealed opportunistic behavior. This article addresses both of these lacunae in the literature by focusing on incentive alignment between parties to information transactions and on empirical proof of opportunistic behavior. When a context aligns incentives, contracting parties do not behave opportunistically. When a context does not align incentives, contracting parties strategically distort or disguise information. A study of 239 regulatory decisions on dispute resolutions and enforcements of energy laws in the Dutch and French electricity industries confirms these propositions.

KW - Behavioral uncertainty

KW - Energy firms

KW - Incentive alignment

KW - Revealed opportunism

U2 - 10.1016/j.jbusres.2011.03.012

DO - 10.1016/j.jbusres.2011.03.012

M3 - Article

VL - 65

SP - 1031

EP - 1039

JO - Journal of Business Research

JF - Journal of Business Research

SN - 0148-2963

IS - 7

ER -