Universität zu Köln

Guetler, Marc and Guetler, Oliver (2014). The interaction of explicit and implicit contracts: A signaling approach. J. Econ. Behav. Organ., 108. S. 135 - 147. AMSTERDAM: ELSEVIER SCIENCE BV. ISSN 1879-1751

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Abstract

We analyze the interaction of explicit and implicit contracts in a model with selfish and fair principals. Fair principals are willing to honor implicit agreements, selfish principals are not. We investigate a separating equilibrium in which principals reveal their type through the contract offer to the agent. Explicit and implicit contracts are shown to be substitutes. Since the agent learns the principal's type, a selfish principal must rely on explicit incentives. A fair principal, by contrast, can effectively induce implicit incentives and does not need to use explicit incentives. We also find a strategic complementarity between explicit and implicit incentives. (C) 2014 Elsevier B.V. All rights reserved.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Guetler, Marc UNSPECIFIED UNSPECIFIED UNSPECIFIED Guetler, Oliver UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-421126
DOI:	10.1016/j.jebo.2014.09.006
Journal or Publication Title:	J. Econ. Behav. Organ.
Volume:	108
Page Range:	S. 135 - 147
Date:	2014
Publisher:	ELSEVIER SCIENCE BV
Place of Publication:	AMSTERDAM
ISSN:	1879-1751
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language PRINCIPAL-AGENT RELATIONSHIP; INFORMED PRINCIPAL; CAREER CONCERNS; RELATIONAL CONTRACTS; INCENTIVE CONTRACTS; SOCIAL PREFERENCES; INEQUITY AVERSION; HIDDEN COSTS; COMPETITION; WORKERS Multiple languages Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/42112