Design a Contract! A Simple Principal-Agent Problem as a Classroom Experiment
We present a simple classroom principal-agent experiment that can effectively be used as a teaching device to introduce important concepts of organizational economics and contracting. In a first part, students take the role of a principal and design a contract that consists of a fixed payment and an incentive component. In the second part, students take the role of agents and decide on an effort level. The experiment can be used to introduce students to the concepts of efficiency, incentive compatibility, outside options and participation constraints, the Coase theorem, and fairness and reciprocity in contracting.
|Date of creation:||Apr 2006|
|Date of revision:|
|Contact details of provider:|| Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD|
Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/economics/cedex/
More information through EDIRC
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.:
- Ernst Fehr & Simon Gaechter, 2000.
"Fairness and Retaliation: The Economics of Reciprocity,"
CESifo Working Paper Series
336, CESifo Group Munich.
- Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
- Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers 040, Institute for Empirical Research in Economics - University of Zurich.
- Vital Anderhub & Simon Gaechter & Manfred Koenigstein, .
"Efficient Contracting and Fair Play in a Simple Principal-Agent Experiment,"
IEW - Working Papers
018, Institute for Empirical Research in Economics - University of Zurich.
- Vital Anderhub & Simon Gächter & Manfred Königstein, 2002. "Efficient Contracting and Fair Play in a Simple Principal-Agent Experiment," Experimental Economics, Springer;Economic Science Association, vol. 5(1), pages 5-27, June.
- Anderhub, Vital & Gächter, Simon & Königstein, Manfred, 1999. "Efficient contracting and fair play in a simple principal-agent experiment," SFB 373 Discussion Papers 1999,82, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Colin F. Camerer & Richard H. Thaler, 1995. "Anomalies: Ultimatums, Dictators and Manners," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 209-219, Spring.
- Manfred K÷nigstein, 2001. "Optimal Contracting With Boundedly Rational Agents," Homo Oeconomicus, Institute of SocioEconomics, vol. 18, pages 211-228.
When requesting a correction, please mention this item's handle: RePEc:not:notcdx:2006-04. 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: (Suzanne Robey)
If references are entirely missing, you can add them using this form.