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No contract or unfair contract: What's better?

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Author Info

  • Bruttel, Lisa
  • Eisenkopf, Gerald

Abstract

We investigate the welfare implications of unfair incentive contracts in comparison with interactions without contracts. Reciprocal people should cooperate conditionally in the latter situation but punish unfairness by non-cooperation. We confirm that some people do cooperate conditionally in a sequential prisoner's dilemma. Furthermore, some subjects do not cooperate if they face an unfair incentive contract in a similar context. However, there is no correlation between these two types of reciprocity. At an aggregate level, all contracts – no matter how fair they are – improve welfare even if agents are conditionally cooperative.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 41 (2012)
Issue (Month): 4 ()
Pages: 384-390

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Handle: RePEc:eee:soceco:v:41:y:2012:i:4:p:384-390

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Web page: http://www.elsevier.com/locate/inca/620175

Related research

Keywords: Contracts; Prisoner's dilemma; Experiment;

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References

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Citations

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Cited by:
  1. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," TWI Research Paper Series 87, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  2. Eisenkopf, Gerald, 2013. "Management Impact in an Experimental Intergroup Contest," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79863, Verein für Socialpolitik / German Economic Association.
  3. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," Working Paper Series of the Department of Economics, University of Konstanz 2013-26, Department of Economics, University of Konstanz.
  4. Gerald Eisenkopf & Urs Fischbacher, 2012. "Naive Responses to Kind Delegation," Working Paper Series of the Department of Economics, University of Konstanz 2012-19, Department of Economics, University of Konstanz.

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