Let's talk : how communication affects contract design
Brandts, Jordi
Charness, Gary
Ellman, Matthew
Universitat Autònoma de Barcelona. Unitat de Fonaments de l'Anàlisi Econòmica
Universitat Autònoma de Barcelona. Institut d'Anàlisi Econòmica

Fecha: 2012
Descripción: 52 p.
Resumen: We study experimentally how the ability to communicate affects the frequency and effectiveness of flexible and inflexible contracts in a bilateral trade context where sellers can adjust trade quality after observing a post-contractual cost shock and a discretionary buyer transfer. In the absence of communication, we find that rigid contracts are more frequent and lead to higher earnings for both buyer and seller. By contrast, in the presence of communication, flexible contracts are much more frequent and considerably more productive, both for buyers and sellers. Also, both buyer and seller earn considerably more from flexible with communication than rigid without communication. Our results show quite strongly that communication, a normal feature in contracting, can remove the potential cost of flexibility (disagreements caused by conflicting perceptions). We offer an explanation based on social norms.
Derechos: Tots els drets reservats
Lengua: Anglès.
Colección: Working papers
Colección: Working papers ; 908.12
Documento: workingPaper
Materia: Communication, contracts, perceptions and cooperation. ; Communication ; Contracts ; Perceptions and cooperation

Adreça alternativa: https://hdl.handle.net/2072/204097

52 p, 542.7 KB

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Documentos de investigación > Working papers

 Registro creado el 2012-12-11, última modificación el 2019-03-12

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