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We explore how inherent preferences for reciprocity and repeated interaction interact in an optimal incentive system. Developing a theoretical model of a long-term employment relationship, we first show that reciprocal preferences are more important when an employee is close to retirement. At...
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setting, we examine the implications of incomplete contracting theory for debt contract design. Consistent with incomplete … contracting theory, we find that, as renegotiation costs fall, the maturity of debt contracts lengthens, the likelihood of …
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