Studies in Economic Rationality explores the applicability of the idea of the X-efficiency paradigm to a number of interrelated problems and unanswered questions in the theory of firm. This reassessment of X-efficiency is particularly timely in light of the ongoing processes of economic restructuring in many industrialized and industrializing countries. These changes reveal the importance of variations of human effort and discrete behavior on the part of workers and management in coping with the accelerating rate of technical change, global competition, and altered social values.
 
Contributions by authors from Australia, Canada, Great Britain, Switzerland, the United States, Italy, and West Germany are organized into sections on Motivational Foundations of Organizations, Normative Implications of X-efficiency in Business Strategy and Government Policies, and Measurement Problems. Among the essays are those that consider the connections between X-efficiency and contestability theory and implicit contracts. The ideas of X-efficiency are applied fruitfully to such topics as supply incentives, the non-profit sector, income tax and work effort, and differences in labor productivity.
 
For the breadth and richness of its approaches and applications of X-efficiency, this volume deserves close attention from economists with a very large range of differing specialties. It makes an effective case that X-efficiency can play a significant part in the future development of economics.