SN37 Stevens and Thevaranjan (2010) find that the agent's social norm sensitivity does not need to be very high for the first-best salary solution to become attainable for firms with low productivity. They also find that the fixed salary solution is more efficient than the traditional incentive solution for firms with relatively low and high levels of productivity. Finally, they find that when the agent's social norm sensitivity is sufficiently high, the fixed salary solution dominates the traditional incentive solution across all levels of firm productivity. They conclude that incorporating social norms increases the descriptive, prescriptive, and pedagogical usefulness of the theory of the firm. DISCUSSION OUESTIONS How do ST defend their assumption of a promise-keeping norm (page 120). What happens in their model as social norm sensitivity goes to zero? What other norms arise when this sensitivity is positive? What does this suggest