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Programmed to Fail - 10. Culture

Acquisition Talk

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The Importance of Local Knowledge in Contracts

The Department of Defense's management systems were designed to limit opportunism rather than harness local information. The effect is to stimulate a bureaucratic culture, mired in checking and rechecking decisions. If the principal can trust the agent not to exploit the opportunism recognized to pervade the contract, then a much wider range of exchanges are allowed to take place.

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