To Choose or Not to Choose: Contracts, Reference Points, Reciprocity, and Signaling
Hart and Moore (2008) argue that varying degrees of flexibility in contracts induce differing reference points and aspiration levels for parties’ shares of a transaction’s total surplus. As a consequence, a trade-off between adaptational flexibility and the prevention of distributional conflicts emerges. In a recent paper, Fehr et al. (2009b) analyze a buyer-seller-relationship with incomplete contracts and ex ante uncertainty regarding the sellers’ cost level to test these effects. We re-run their experiment and introduce another treatment with exogenously determined contract types. Like FHZ we find reference point effects in both treatments. However, uncooperative shading behavior in our treatments differs substantially from that described in FHZ. Furthermore, it makes a significant difference whether contract types are determined by buyers or determined exogenously. We explain this by introducing two further effects, a reciprocity effect and a signaling effect.
|Date of creation:||2012|
|Contact details of provider:|| Postal: Julius-Albert-Str. 2, 38678 Clausthal-Zellerfeld, Germany|
Phone: +49 5323 727625
Fax: +49 5323 727639
Web page: http://www.wiwi.tu-clausthal.de/abteilungen/volkswirtschaftslehre/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:tuc:tucewp:0007. 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: (Janis Kesten-Kühne)
If references are entirely missing, you can add them using this form.