Contracts, Reference Points, and Competition-Behavioral Effects of The Fundamental Transformation
AbstractIn this paper we study the role of incomplete ex ante contracts for ex post trade. Previous experimental evidence indicates that a contract provides a reference point for entitlements when the terms are negotiated in a competitive market. We show that this finding no longer holds when the terms are determined in a non-competitive way. Our results imply that the presence of a "fundamental transformation" (i.e., the transition from a competitive market to a bilateral relationship) is important for a contract to become a reference point. To the best of our knowledge this behavioral aspect of the fundamental transformation has not been shown before. (JEL: C91, D03, D23) (c) 2009 by the European Economic Association.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by MIT Press in its journal Journal of the European Economic Association.
Volume (Year): 7 (2009)
Issue (Month): 2-3 (04-05)
Contact details of provider:
Web page: http://www.mitpressjournals.org/jeea
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Björn Bartling & Manuel Grieder & Christian Zehnder, 2014. "Let the Market Decide: An Experimental Study of Competition and Fairness," CESifo Working Paper Series 4831, CESifo Group Munich.
- Kohei Daido & Takeshi Murooka, 2011. "Team Incentives and Reference-Dependent Preferences," Discussion Paper Series 70, School of Economics, Kwansei Gakuin University, revised May 2011.
- Bartling Björn & Grieder Manuel & Zehnder Christian, 2014. "Let the market decide: an experimental study of competition and fairness," ECON - Working Papers 158, Department of Economics - University of Zurich.
- Hoppe, Eva I. & Schmitz, Patrick W., 2009.
"Can Contracts Solve the Hold-Up Problem? Experimental Evidence,"
CEPR Discussion Papers
7205, C.E.P.R. Discussion Papers.
- Hoppe, Eva I. & Schmitz, Patrick W., 2011. "Can contracts solve the hold-up problem? Experimental evidence," Games and Economic Behavior, Elsevier, vol. 73(1), pages 186-199, September.
- Cappelen, Alexander W. & Hagen, Rune Jansen & Sørensen, Erik Ø. & Tungodden, Bertil, 2012. "DO NON-ENFORCEABLE CONTRACTS MATTER? EVIDENCE FROM AN INTERNATIONAL LAB EXPERIMENT Department," Working Papers in Economics 16/12, University of Bergen, Department of Economics.
- Fehr, Ernst & Hart, Oliver & Zehnder, Christian, 2011.
"How Do Informal Agreements and Renegotiation Shape Contractual Reference Points?,"
IZA Discussion Papers
6095, Institute for the Study of Labor (IZA).
- Ernst Fehr & Oliver D. Hart & Christian Zehnder, 2011. "How Do Informal Agreements and Renegotiation Shape Contractual Reference Points?," NBER Working Papers 17545, National Bureau of Economic Research, Inc.
- Ernst Fehr & Oliver Hart & Christian Zehnder, 2011. "How do informal agreements and renegotiation shape contractual reference points?," ECON - Working Papers 043, Department of Economics - University of Zurich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karie Kirkpatrick).
If references are entirely missing, you can add them using this form.