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Fehr, Ernst; Klein, Alexander; Schmidt, Klaus M. - 2005 - This version: November 5, 2005

trust contracts that pay a generous wage upfront are less efficient than incentive contracts. The principals understand this …

Persistent link: https://www.econbiz.de/10010371080

Dealing with the Paradox of Embeddedness : The Role of Contracts and Trust in Facilitating Movement Out of Committed Relationships

Lazzarini, Sérgio; Miller, Gary J.; Zenger, Todd R. - 2007

market participants, in the sense that they limit potential losses due to opportunistic behavior. Second, trust in general … others (as opposed to trust in familiar people) reduces participants' perception of hazards in market exchanges and hence … promotes transactions among strangers. By increasing the propensity to initiate new exchanges, general trust also diminishes …

Persistent link: https://www.econbiz.de/10014108468

Fairness, incentives and contractual incompleteness

Fehr, Ernst; Klein, Alexander; Schmidt, Klaus M. - 2001

We show that concerns for fairness may have dramatic consequences for the optimal provision of incentives in a moral hazard context. Incentive contracts that are optimal when there are only selfish actors become inferior when some agents are concerned about fairness. Conversely, contracts that...

Persistent link: https://www.econbiz.de/10011398105

Contracts, fairness, and incentives

Fehr, Ernst; Klein, Alexander; Schmidt, Klaus M. - 2004 - This version: March 31, 2004

We show experimentally that fairness concerns may have a decisive impact on both the actual and the optimal choice of contracts in a moral hazard context. Explicit incentive contracts that are optimal according to self-interest theory become inferior when some agents value fairness. Conversely,...

Persistent link: https://www.econbiz.de/10010440446

Social Capital and Informal Contracting : Experimental Evidence

Pellegrino, Bruno - 2019

Informal contracting is widely spread, but what makes it work in the absence of institutional enforcement and repetition? According to game-theoretic models of social capital, informal relationships can help agents self-enforce contracts when third-party enforcement is not available, because...

Persistent link: https://www.econbiz.de/10012900806

How contracts influence trust and distrust

Lumineau, Fabrice - In: Journal of management : JOM 43 (2017) 5, pp. 1553-1577

Persistent link: https://www.econbiz.de/10011732527

Motivate and Select : Relational Contracts with Persistent Types

Nikolowa, Radoslawa - 2016

We develop a model of relational contracts with moral hazard and asymmetric persistent information about an employee's type. We find that the form of the optimal contract depends on the job characteristics and the distribution of employees' talent. Bonus contracts are more likely to be adopted...

Persistent link: https://www.econbiz.de/10013006141

Fuzzy Reciprocity : Contracting Limitations in Bilateral Economic Relationships

Fisher, James - 2021

Economic partners – like masters and apprentices – produce benefits for each other. Yet, they are often subject to contracting limitations that restrict their actions, and thus the benefits they produce and receive. We characterize the relationship between (contracting) limitations and...

Persistent link: https://www.econbiz.de/10013218935

Should you allow your agent to become your competitor? : on non-compete agreements in employment contracts

Kräkel, Matthias; Sliwka, Dirk - 2006

We discuss a principal-agent model in which the principal has the opportunity to include a non-compete agreement in the employment contract. We show that not imposing such an agreement can be beneficial for the principal as the possibility to leave the firm generates implicit incentives for the...

Persistent link: https://www.econbiz.de/10010371071

Motivate and select : relational contracts with persistent types

Nikolowa, Radoslawa - 2014

We develop a model of relational contracts with moral hazard and asymmetric persistent information about an employee's type. We find that the form of the optimal contract depends on the job characteristics as well as the distribution of employees' talent. Bonus contracts are more likely to be...

Persistent link: https://www.econbiz.de/10010382180