Repeated moral hazard and contracts with memory: A laboratory experiment

Nieken, Petra and Schmitz, Patrick W. (February 2012): Repeated moral hazard and contracts with memory: A laboratory experiment. SFB/TR 15 Discussion Paper No. 372

Abstract

This paper reports data from a laboratory experiment on two-period moral hazard problems. The findings corroborate the contract-theoretic insight that even though the periods are technologically unrelated, due to incentive considerations principals can benefit from offering long-term contracts that exhibit memory.

• Item Type: Paper
• Keywords: Repeated moral hazard; Sequential hidden actions; Laboratory experiment
• Faculties: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > B4 - Die Gestaltung von Turnieren im Rahmen der Corporate Governance
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: D82, J33
• Language: English