Fair Offers in a Repeated Principal-Agent Relationship with Hidden Actions

Francois Cochard () and Marc Willinger
Additional contact information
Francois Cochard: CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]

Post-Print from HAL

Abstract: We test a repeated principal–agent relationship with hidden actions in the laboratory. At each period, the principal offers payments to the agent in order to induce him to provide the high effort level. The agent can accept or reject the offer; if he accepts it, he can choose the high or the low effort level. We observe that offered payments are higher than predicted by the subgame-perfect equilibrium, and higher in the partners' than in the strangers' design. Furthermore, agents strategically reject inequitable offers in early rounds in order to induce principals to increase payments in the subsequent rounds.

Keywords: contract theory; principal-agent; moral hazard; experimental economics (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Published in Economica, 2005, 72 (286), pp.225-240. ⟨10.1111/j.0013-0427.2005.00412.x⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:hal:journl:hal-01351562

DOI: 10.1111/j.0013-0427.2005.00412.x

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().