Complexity, Contract and the Employment Relationship

W. Bentley Macleod

No 342., Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: This paper introduces a model of contract incompleteness and bounded rationality based on the multi-tasking model of Holmstrom and Milgrom (1991). It is shown that the trade-off between the use of an employment relationship versus and explicit state contingent contract depends on number of tasks or complexity of the services provided by the individual.

Date: 1997-01-01
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