Endogenous Matching and the Empirical Determinants of Contract Form
Theoretical work on contracts often identifies an "optimal" contract as a function of the characteristics of the principal and agent who are contracting. Correspondingly, empirical work on contracts often regresses contract form on observed (by the econometrician) characteristics of the principal and agent. This paper examines the econometric implications when some of the theoretically relevant characteristics are partially observed (e.g. proxied) or unobserved. We show that if there are incentives wehreby particular types of agents end up contracting (i.e. matching) with particular types of principals (and we argue that there are), one may end up with estimated co-efficients on the observed characteristics that are misleading. The problem is that this matching generates correlation between observable characteristics of one party and proxy errors of the other party, causing biases in many or all coefficients of interest. We then suggest a number of solutions to this problem, applying these solutins to a historical dataset on agricultural contracts between landlords and tenants in 15th Century Tuscany.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Jan 1999|
|Contact details of provider:|| Postal: 264 Bay State Road, Boston, MA 02215|
Web page: http://www.bu.edu/econ/ied/
More information through EDIRC
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.:
- Allen, Franklin, 1985. "On the Fixed Nature of Sharecropping Contracts," Economic Journal, Royal Economic Society, vol. 95(377), pages 30-48, March.
- William Hallagan, 1978. "Self-Selection by Contractual Choice and the Theory of Sharecropping," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 344-354, Autumn.
- Shimer, R. & Smith, L., 1997.
"Assortative Matching and Search,"
97-2a, Massachusetts Institute of Technology (MIT), Department of Economics.
- Hoffman, Philip T., 1984. "The Economic Theory of Sharecropping in Early Modern France," The Journal of Economic History, Cambridge University Press, vol. 44(02), pages 309-319, June.
- Fenoaltea, Stefano, 1984. "Slavery and Supervision in Comparative Perspective: A Model," The Journal of Economic History, Cambridge University Press, vol. 44(03), pages 635-668, September.
- Luporini, Annalisa & Parigi, Bruno, 1996. "Multi-Task Sharecropping Contracts: The Italian Mezzadria," Economica, London School of Economics and Political Science, vol. 63(251), pages 445-57, August.
- Basu, Kaushik, 1992. "Limited liability and the existence of share tenancy," Journal of Development Economics, Elsevier, vol. 38(1), pages 203-220, January.
- Allen, Douglas & Lueck, Dean, 1992. "Contract Choice in Modern Agriculture: Cash Rent versus Cropshare," Journal of Law and Economics, University of Chicago Press, vol. 35(2), pages 397-426, October.
- Jean-Jacques Laffont & Mohamed Salah Matoussi, 1995.
"Moral Hazard, Financial Constraints and Sharecropping in El Oulja,"
Review of Economic Studies,
Oxford University Press, vol. 62(3), pages 381-399.
- Laffont, Jean-Jacques & Matoussi, Mohamed Salah., 1988. "Moral Hazard, Financial Constraints and Sharecropping in El Oulja," Working Papers 667, California Institute of Technology, Division of the Humanities and Social Sciences.
- Carmona, Juan & Simpson, James, 1998.
"The "rabassa morta" in Catalan viticulture: the rise and decline of a long term sharecropping contract, 1670s-1920s,"
IFCS - Working Papers in Economic History.WH
wh980402, Universidad Carlos III de Madrid. Instituto Figuerola.
- Carmona, Juan & Simpson, James, 1999. "The “Rabassa Morta” in Catalan Viticulture: The Rise and Decline of a Long-Term Sharecropping Contract, 1670s–1920s," The Journal of Economic History, Cambridge University Press, vol. 59(02), pages 290-315, June.
- Brickley, James A. & Dark, Frederick H., 1987. "The choice of organizational form The case of franchising," Journal of Financial Economics, Elsevier, vol. 18(2), pages 401-420, June.
- Lafontaine, F. & Slade, M., 1996.
"Retail Contracting: Theory and Practice,"
96b09, Universite Aix-Marseille III.
- Sengupta, Kunal, 1997. "Limited liability, moral hazard and share tenancy," Journal of Development Economics, Elsevier, vol. 52(2), pages 393-407, April.
- Martin, Robert E, 1988. "Franchising and Risk Management," American Economic Review, American Economic Association, vol. 78(5), pages 954-968, December.
- Dubois, Pierre, 2002.
"Moral hazard, land fertility and sharecropping in a rural area of the Philippines,"
Journal of Development Economics,
Elsevier, vol. 68(1), pages 35-64, June.
- Pierre Dubois, 1999. "Moral Hazard, Land Fertility and Sharecropping in a Rural Area of the Philippines," Working Papers 99-30, Centre de Recherche en Economie et Statistique.
- Lafontaine, Francine & Bhattacharyya, Sugato, 1995. "The role of risk in franchising," Journal of Corporate Finance, Elsevier, vol. 2(1-2), pages 39-74, October.
- Canice Prendergast, 2002. "The Tenuous Trade-off between Risk and Incentives," Journal of Political Economy, University of Chicago Press, vol. 110(5), pages 1071-1102, October.
- Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-367, June.
- Reid, Joseph D., 1973. "Sharecropping As An Understandable Market Response: The Post-Bellum South," The Journal of Economic History, Cambridge University Press, vol. 33(01), pages 106-130, March.
- Pudney, Stephen & Galassi, Francesco L & Mealli, Fabrizia, 1998. "An Econometric Model of Farm Tenures in Fifteenth-Century Florence," Economica, London School of Economics and Political Science, vol. 65(260), pages 535-56, November.
- Leffler, Keith B & Rucker, Randal R, 1991. "Transactions Costs and the Efficient Organization of Production: A Study of Timber-Harvesting Contracts," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1060-1087, October.
- Braverman, Avishay & Stiglitz, Joseph E, 1982. "Sharecropping and the Interlinking of Agrarian Markets," American Economic Review, American Economic Association, vol. 72(4), pages 695-715, September.
- Alston, Lee J. & Higgs, Robert, 1982. "Contractual Mix in Southern Agriculture since the Civil War: Facts, Hypotheses, and Tests," The Journal of Economic History, Cambridge University Press, vol. 42(02), pages 327-353, June.
This item is featured on the following reading lists or Wikipedia pages:
When requesting a correction, please mention this item's handle: RePEc:fth:bosecd:92. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel)
If references are entirely missing, you can add them using this form.