trust and reciprocity in incentive contracting

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1、JournalofEconomicBehavior&Organization70(2009)93–105ContentslistsavailableatScienceDirectJournalofEconomicBehavior&Organizationjournalhomepage:www.elsevier.com/locate/econbaseTrustandreciprocityinincentivecontractingMaryRigdonResearchCenterforGroupDynamics,InstituteforSocialResearch,Universit

2、yofMichigan,AnnArbor,MI48104,UnitedStatesarticleinfoabstractArticlehistory:PrincipalscanattempttogetagentstoperformcertainactionspreferabletotheprincipalbyReceived15January2007usingexpostpunishmentsorrewardstoalignincentives.Fielddataaremixedonwhether,Receivedinrevisedform9January2009andtowhat

3、extent,suchinformalincentivecontracting(paradoxically)crowdsoutefficientAccepted12January2009solutionstotheagencyproblem.Thispaperexplores,viaanovelsetoflaboratoryexperi-Availableonline22January2009ments,theimpactofexpostincentivesoninformalcontractsbetweenprincipalsandagentsinbargainingenviron

4、mentsinwhichtherearegainsfromexchangeandwhenthereisanJELclassification:opportunityfortheprincipaltorelayano-costdemandofthedivisionofthosegains.Incen-C91C70tivecontractingintheseenvironmentsdoesnotcrowd-outoff-equilibriumcooperation,andD63athighincentivelevelscooperationiscrowdedin.D81©2009Else

5、vierB.V.Allrightsreserved.Keywords:TrustReciprocityIncentivecontractsPrincipal–agentExperimentaleconomics“Homer,thekeytoworkermotivationistrust.”HankScorpio,CEOGlobexCorporation“Behold!Thegreatestbreakthroughinlaborrelationssincethecato’ninetails.”C.M.Burns,Owner,SpringfieldNuclearPowerPlant1.I

6、ntroductionAkeyfeatureofmanybilateralbargainingsituationsisthattheyinvolveoneparty(theprincipal)enlistingtheother(theagent)toaffectsomeactionforafee.Delegatingtheactionbytrustingtheagentiscostlytotheprincipal,buttherearepotentialjointgainsfromdelegating—anditistheagent’sactionthatdeterminesthe

7、distributionofthosegains.Theremaybemanyactionsopentotheagent,andtheprincipalandagentmayvaluetheoutcomesofeachsuchactiondifferently.Inparticular,theactiontheagentmostvaluesmaybetheleast-valuedalternativetotheprincipal.Sincethereisnoguara