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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 [PDF, 370kB]


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.

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