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Reputazione, flessibilità e durata ottima dei contratti

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  • Ferdinando Colombo
  • Guido Merzoni

Abstract

We study the optimal length of a delegation contract in an incomplete information model where an agent plays a (possibly) repeated game on behalf of his principal. A short-term contract provides the principal with the flexibility to replace an agent who has proved not to be suitable for his job, while a long-term contract allows the agent to build a reputation for being trustworthy in his relationships with third parties. When contracts are renewable, the relationship between principal and agent may sometimes turn out to be stable even with short-term contracts. In this paper we show that this implies a non-monotonic relation between the importance of reputation and the optimal length of delegation contracts. In particular, in games where reputation is very important, short-term delegation contracts can be optimal. The implications of our analysis are illustrated by means of a few examples: the problem of credibility in the management of monetary policy, vertical relationships within firms, the strategic interactions between lenders and borrowers.

Suggested Citation

  • Ferdinando Colombo & Guido Merzoni, 2004. "Reputazione, flessibilità e durata ottima dei contratti," Economia politica, Società editrice il Mulino, issue 2, pages 233-268.
    • Handle: RePEc:mul:jb33yl:doi:10.1428/14113:y:2004:i:2:p:233-268
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    Cited by:

    1. Ferdinando Colombo & Guido Merzoni, 2008. "For how long to tie your hands? Stable relationships in an unstable environment," Journal of Economics, Springer, vol. 95(2), pages 93-120, November.
    2. Guido Merzoni, 2010. "A theory of trust failure and vertical integration in industrial districts," DISEIS - Quaderni del Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo dis1001, Università Cattolica del Sacro Cuore, Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo (DISEIS).
    3. Guido Merzoni & Federico Trombetta, 2012. "Foundations of trust, interpersonal relationships and communities," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 120(3), pages 295-312.

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