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Journal of Economic Behavior & Organization
Article . 2009 . Peer-reviewed
License: Elsevier TDM
Data sources: Crossref
SSRN Electronic Journal
Article . 2006 . Peer-reviewed
Data sources: Crossref
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Trust and Reciprocity in Incentive Contracting

Authors: Mary Rigdon;

Trust and Reciprocity in Incentive Contracting

Abstract

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 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.

Keywords

incentives, principal-agent, bargaining, trust, cooperation, punishment, reward, incentives; trust; reciprocity; organizations; experimental economics, jel: jel:C70, jel: jel:D81, jel: jel:C91, jel: jel:D63, jel: jel:D00, jel: jel:D01, jel: jel:D02

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    selected citations
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    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    56
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Top 10%
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Top 10%
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
    Average
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
56
Top 10%
Top 10%
Average
bronze