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The Interaction of Explicit and Implicit Contracts

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Author Info
Monika Schnitzer

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Abstract

We analyze explicit and implicit contracts in a repeated principal-agent model with observable but only partially contractible actions of the agent. It is shown that the set of implementable actions may increase or decrease if additional actions become contractible.

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File URL: ftp://web.bgse.uni-bonn.de/pub/RePEc/bon/bonsfa/bonsfa452.ps
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Publisher Info
Paper provided by University of Bonn, Germany in its series Discussion Paper Serie A with number 452.

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Date of creation: Jul 1994
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Handle: RePEc:bon:bonsfa:452

Contact details of provider:
Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 9221
Web page: http://www.bgse.uni-bonn.de/index.php?id=517

For technical questions regarding this item, or to correct its listing, contact: (Daniel Park).

Related research
Keywords: Implicit contracts; repeated games.;

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Find related papers by JEL classification:
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Eaton, Jonathan, 1993. "Sovereign Debt: A Primer," World Bank Economic Review, Oxford University Press, vol. 7(2), pages 137-72, May.
    Other versions:
  2. Abreu, Dilip, 1988. "On the Theory of Infinitely Repeated Games with Discounting," Econometrica, Econometric Society, vol. 56(2), pages 383-96, March. [Downloadable!] (restricted)
  3. Bull, Clive, 1987. "The Existence of Self-Enforcing Implicit Contracts," The Quarterly Journal of Economics, MIT Press, vol. 102(1), pages 147-59, February. [Downloadable!] (restricted)
  4. MacLeod, W Bentley & Malcomson, James M, 1989. "Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment," Econometrica, Econometric Society, vol. 57(2), pages 447-80, March. [Downloadable!] (restricted)
    Other versions:
  5. Baker, George & Gibbons, Robert & Murphy, Kevin J, 1994. "Subjective Performance Measures in Optimal Incentive Contracts," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 1125-56, November. [Downloadable!] (restricted)
    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Matthias Kräkel & Dirk Sliwka, 2006. "Should You Allow Your Agent to Become Your Competitor? -- On Non-Compete Agreements in Employment Contracts," Bonn Econ Discussion Papers bgse4_2006, University of Bonn, Germany. [Downloadable!]
    Other versions:
  2. Kvaløy, Ola & Olsen, Trond E., 2006. "The rise of individual performance pay," Discussion Papers 2006/22, Department of Finance and Management Science, Norwegian School of Economics and Business Administration. [Downloadable!]
    Other versions:
  3. Elisabetta Iossa & Giancarlo Spagnolo, 2009. "Contracts as Threats: on a Rationale For Rewarding A while Hoping For B," CEIS Research Paper 147, Tor Vergata University, CEIS, revised 30 Sep 2009. [Downloadable!]
  4. Randolph Sloof & Joep Sonnemans, 2009. "The Interaction between Explicit and Relational Incentives: An Experiment," Tinbergen Institute Discussion Papers 09-030/1, Tinbergen Institute. [Downloadable!]
  5. Kvaløy, Ola & Olsen, Trond E., 2005. "Team Incentives in Relational Employment Contracts," Discussion Papers 2005/7, Department of Finance and Management Science, Norwegian School of Economics and Business Administration. [Downloadable!]
    Other versions:
  6. Dirk Sliwka, 2001. "On the Use of Nonfinancial Performance Measures in Management Compensation," Bonn Econ Discussion Papers bgse29_2001, University of Bonn, Germany. [Downloadable!]
    Other versions:
  7. Jonathan Levin, 2003. "Relational Incentive Contracts," American Economic Review, American Economic Association, vol. 93(3), pages 835-857, June. [Downloadable!]
    Other versions:
  8. Oliver Gürtler, 2005. "On Delegation under Relational Contracts," Bonn Econ Discussion Papers bgse32_2005, University of Bonn, Germany. [Downloadable!]
  9. Christian Schultz, 1999. "Export cartels and domestic markets," CIE Discussion Papers 1999-04, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
  10. Brown, Martin & Falk, Armin & Fehr, Ernst, 2003. "Relational Contracts and the Nature of Market Interactions," IZA Discussion Papers 897, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  11. Martin Brown & Armin Falk & Ernst Fehr, . "Contractual Incompleteness and the Nature of Market Interactions," IEW - Working Papers iewwp038, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  12. Fehr, Ernst & Klein, Alexander & Schmidt, Klaus M., 2001. "Fairness, Incentives and Contractual Incompleteness," CEPR Discussion Papers 2790, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  13. Oliver Gürtler, 2006. "On Delegation under Relational Contracts," Discussion Papers 113, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  14. repec:att:wimass:1919988 is not listed on IDEAS
  15. Spagnolo, Giancarlo, 2002. "Globalization and Cooperative Relations," CEPR Discussion Papers 3522, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  16. W. Bentley MacLeod, 2006. "Reputations, Relationships and the Enforcement of Incomplete Contracts," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  17. Hueth, Brent & Ligon, Ethan & Melkonyan, Tigran, 2008. "Interactions between Explicit and Implicit Contracting: Evidence from California Agriculture," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6068, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  18. Paul A.Grout & Ian Jewitt & Silvia Sonderegger, 2007. "Governance Reform in Legal Service Markets," The Centre for Market and Public Organisation 07/170, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  19. Bernd Irlenbusch & Dirk Sliwka, 2005. "Incentives, Decision Frames, and Motivation Crowding Out - An Experimental Investigation," IZA Discussion Papers 1758, Institute for the Study of Labor (IZA). [Downloadable!]
  20. Canice Prendergast & Lars A. Stole, 1996. "Non-Monetary Exchange Within Firms and Industry," NBER Working Papers 5765, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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