Incentives, opportunism and behavioral uncertainty in electricity industries

Eva Niesten, Albert Jolink

Research output: Contribution to journalArticle

19 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

Keywords

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

ASJC Scopus subject areas

  • Marketing

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