Efficient Contracting and Fair Sharing in a Principal-Agent Experiment
Journal
Experimental Economics
ISSN
1386-4157
ISSN-Digital
1573-6938
Type
journal article
Date Issued
2002-06-01
Author(s)
Anderhub, Vital
;
Gaechter, Simon
;
Königstein, Manfred
Abstract
We study behavior within a simple principal-agent experiment. Our design allows for a large class of linear contracts. Principals can offer any feasible combination of (negative) fixed wages and incentives in the form of return sharing. This great contractual flexibility allows us to study incentive compatibility simultaneously with issues of 'fair sharing' and reciprocity, which were previously found to be important. We find a high degree of incentive-compatible behavior, but also 'fair sharing' and reciprocity. In contrast to other incentive devices studied in the literature, the incentives are 'reciprocity-compatible'. Principals recognize the agency problem and react accordingly.
Language
English
HSG Classification
not classified
Refereed
Yes
Publisher
Kluwer
Publisher place
Boston, Mass.
Volume
5
Number
1
Start page
5
End page
25
Pages
21
Subject(s)
Division(s)
Eprints ID
10376