Adaptive Contracting: The Trial-and-Error Approach to Outsourcing

Morten Bennedsen and Christian Schultz ()
Additional contact information
Morten Bennedsen: Copenhagen Business School

No 03-18, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: Adaptive contracting is defined as a strategy in which a principal experiments - through trial-and-error - with the degree of contractual completeness. We highlight two potential benefits of an adaptive approach: First, the implied delegation of authority can be beneficial for the principal even if the agent acts opportunistically. Second, the government extracts information from experimenting with delegation of authority and we identify a positive option value associated with this learning feature.

Keywords: incomplete contracting; trial and error; authority; outsourcing (search for similar items in EconPapers)
JEL-codes: D72 L33 L97 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2003-04
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.econ.ku.dk/english/research/publications/wp/2003/0318.pdf/ (application/pdf)

Related works:
Journal Article: Adaptive contracting: the trial-and-error approach to outsourcing (2005)
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:kud:kuiedp:0318

Access Statistics for this paper

More papers in Discussion Papers from University of Copenhagen. Department of Economics Oester Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().