Kragl, Jenny; Schmid, Julia - Sonderforschungsbereich 649: Ökonomisches Risiko, … - 2006
We study the effects of envy on the feasibility of relational contracts in a standard moral hazard setup with two … contribution to firm value. Both agents exhibit disadvantageous inequity aversion. In contrast to the literature, we find that … inequity aversion may be beneficial: In the presence of envy, for a certain range of interest rates relational contracts may be …