Repeated Moral Hazard and Contracts with Memory: A Laboratory Experiment

19 Pages Posted: 9 Feb 2011

See all articles by Petra Nieken

Petra Nieken

Chair of Human Resource Management

Patrick W. Schmitz

University of Cologne; Centre for Economic Policy Research (CEPR)

Date Written: February 2010

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 may prefer to offer contracts with memory.

Keywords: Laboratory experiment, Repeated moral hazard, Sequential hidden actions

JEL Classification: D82, J33

Suggested Citation

Nieken, Petra and Schmitz, Patrick W., Repeated Moral Hazard and Contracts with Memory: A Laboratory Experiment (February 2010). CEPR Discussion Paper No. DP8241. Available at SSRN: https://ssrn.com/abstract=1758452

Petra Nieken (Contact Author)

Chair of Human Resource Management ( email )

Kaiserstra├če 12
Karlsruhe, Baden W├╝rttemberg 76131
Germany

Patrick W. Schmitz

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

HOME PAGE: http://schmitz.uni-koeln.de/index.php?s=mitarbeiter&t=schmitz

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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