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Incentives, opportunism and behavioral uncertainty in electricity industries

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  • Niesten, Eva
  • Jolink, Albert

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.

Suggested Citation

  • Niesten, Eva & Jolink, Albert, 2012. "Incentives, opportunism and behavioral uncertainty in electricity industries," Journal of Business Research, Elsevier, vol. 65(7), pages 1031-1039.
  • Handle: RePEc:eee:jbrese:v:65:y:2012:i:7:p:1031-1039 DOI: 10.1016/j.jbusres.2011.03.012
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    Cited by:

    1. Eva Niesten & Albert Jolink, 2014. "Absence of a market in the Dutch balancing mechanism: European rules versus specific investments," European Journal of Law and Economics, Springer, vol. 38(1), pages 71-90, August.
    2. Lo Nigro, Giovanna, 2016. "The effect of early or late R&D inbound alliance on innovation," Journal of Business Research, Elsevier, vol. 69(5), pages 1791-1795.
    3. Kang, Bohyeon & Jindal, Rupinder P., 2015. "Opportunism in buyer–seller relationships: Some unexplored antecedents," Journal of Business Research, Elsevier, vol. 68(3), pages 735-742.
    4. Bhattacharya, Ananya & Singh, Prakash J. & Nand, Alka Ashwini, 2015. "Antecedents of buyer opportunistic behavior in outsourcing relationships," International Journal of Production Economics, Elsevier, vol. 166(C), pages 258-268.

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