Contract Dynamics : Lessons from Empirical Analyses
AbstractThe recognition that contracts have a time dimension has given rise to a very abundant literature since the end of the 1980s. In such a dynamic context, the contract may take place over several periods and develop repeated interactions. Then, the principal topics of the analysis are commitment, reputation, memory and the renegotiation of the contract. Few papers have tried to apply the predictions of dynamic contract theory to data. The examples of applications introduced in this article show the relevance of the change from a static contractual framework to a dynamic one. In a dynamic context, contracts are more sophisticated and can include commitment or a better revelation of the type of agent (insurance contract) ; contracts are more flexible (franchise contract) or offer a better measurement of information asymmetry and effort level (insurance or work contract).
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Bibliographic InfoPaper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 1035.
Length: 31 pages
Date of creation: 2010
Date of revision:
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Contract; Dynamics; Econometrics; Statistical Tests;
Find related papers by JEL classification:
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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