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Trust and reciprocity in incentive contracting Author info | Abstract | Publisher info | Download info | Related research | Statistics Rigdon, Mary
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Principals can attempt to get agents to perform certain actions preferable to the principal by using ex post punishments or rewards to align incentives. Field data is mixed on whether, and to what extent, such informal incentive contracting (paradoxically) crowds out efficient solutions to the agency problem. This paper explores, via a novel set of laboratory experiments, the impact of ex post incentives on informal contracts between principals and agents in bargaining environments in which there are gains from exchange and when there is an opportunity for the principal to relay a no-cost demand of the division of those gains. Incentive contracting in these environments does not crowd-out off-equilibrium cooperation, and at high incentive levels cooperation is crowded in.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
2007.
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Date of creation: May 2005Date of revision:
15 May 2006Handle: RePEc:pra:mprapa:2007Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany Phone: +49-(0)89-2180-2219 Fax: +49-(0)89-2180-3900 Web page: http://mpra.ub.uni-muenchen.de More information through EDIRC
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Keywords: incentives trust reciprocity organizations experimental economics Other versions of this item:
Find related papers by JEL classification: D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations D00 - Microeconomics - - General - - - General
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references 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.)
Gillies, Anthony S & Rigdon, Mary L, 2008.
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