Reciprocity, self-interest and reputation: debt vs equity contracts

Syed Munawar Shah () and Mariani Abdul-Majid
Additional contact information
Syed Munawar Shah: Balochistan University of Information Technology and Management Sciences, https://www.emerald.com/insight/content/doi/10.1108/IES-05-2019-0004/full/html

Islamic Economic Studies, 2019, vol. 27-1, 53-64

Abstract: Purpose – The purpose of this paper is to examine whether reputation element affects the decision relative performance of trust, bonus and incentive contracts using social laboratory experiments. Design/methodology/approach – The study conducts the following lab experiments bonus–incentive treatment without reputation, bonus–incentive treatment with reputation and trust–incentive treatment with reputation. Findings – The study finds that the reputation and fairness concerns, in contrast to self-interest, may have a decisive impact on the actual and optimal choices in the reciprocity-based contracts. The principal pays higher salaries in the bonus contract as compared to an incentive contract. Originality/value – The study contributes to the behavioral economic literature in the following dimensions. The existing literature on lab experiments considers a bonus contract as better than the debt contract; however, it does not consider the trust contract better than the debt contract.

Keywords: Self-Interest; Reciprocity; Reputation; Debt contract; Equity contract (search for similar items in EconPapers)
JEL-codes: B52 C72 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://iesjournal.org/english/Docs/249.pdf Full text (application/pdf)

Related works:
Journal Article: Reciprocity, self-interest and reputation: debt vs equity contracts (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:isecst:0182

Access Statistics for this article

Islamic Economic Studies is currently edited by Salman Syed Ali and Anis Ben Khedher

More articles in Islamic Economic Studies from The Islamic Research and Training Institute (IRTI) Contact information at EDIRC.
Bibliographic data for series maintained by IRTI Staff () and ().