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Acceptable Contracts, Opportunism, and Rigid Hourly Wages

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  • Roger A. McCain

Abstract

This paper presents a model of opportunism and contingent wage schedules in labor markets, which is, in a sense, intermediate between the "implicit" and explicit contract approaches. The "expected utility" condition is not a part of the contract, but is a condition for the acceptability of a contract form by employees. Contract forms are constrained by conditions that are enforcable ex post. Of the contract forms examined, the only one mutually acceptable is one with inflexible hourly wages.

Suggested Citation

  • Roger A. McCain, 1987. "Acceptable Contracts, Opportunism, and Rigid Hourly Wages," Eastern Economic Journal, Eastern Economic Association, vol. 13(3), pages 205-213, Jul-Sep.
    • Handle: RePEc:eej:eeconj:v:13:y:1987:i:3:p:205-213
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume13/V13N3P205_213.pdf
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    3. Kahn, Charles M. & Green, Jerry, 1983. "Wage-Employment Contracts," Scholarly Articles 3203642, Harvard University Department of Economics.
    4. Akerlof, George A & Yellen, Janet L, 1985. "Can Small Deviations from Rationality Make Significant Differences to Economic Equilibria?," American Economic Review, American Economic Association, vol. 75(4), pages 708-720, September.
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    6. Eckalbar, John C, 1980. "The Stability of Non-Walrasian Processes: Two Examples," Econometrica, Econometric Society, vol. 48(2), pages 371-386, March.
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