Bayer, Ralph; Binenbaum, Eran - Centre for International Economic Studies, School of … - 2005
In a moral hazard model with relationship-speci?c investment (?hay?) and limited liability (no ?stick?), we compare two institutional regimes: one without, and one with, ex-post incentives (?carrot?). We examine the welfare implications of introducing ?carrots?. We use this model to analyze...