The Interaction between Explicit and Relational Incentives: An Experiment

Randolph Sloof and Joep Sonnemans ()

No 09-030/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper resulted in a publication in 'Games and Economic Behavior' , 73(2), 573-94.

We consider repeated trust game experiments to study the interplay between explicit and relational incentives. After having gained experience with two payoff variations of the trust game, subjects in the final part explicitly choose which of these two variants to play. Theory predicts that subjects will choose the payoff dominated game (representing a bad explicit contract), because this game better sustains (implicit) relational incentives backed by either reputational or reciprocity considerations. We also explicitly test how game choice is affected by the length of the repeated game.

Keywords: relational contracts; explicit incentives; crowding out; experiments (search for similar items in EconPapers)
JEL-codes: C91 J41 M52 (search for similar items in EconPapers)
Date: 2009-04-14
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Related works:
Journal Article: The interaction between explicit and relational incentives: An experiment (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20090030

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