We develop and estimate a model of dynamic interactions in which commitment is limited and contracts are incomplete to … each other through both formal contracts and informal agreements, that is, self-enforcing agreements specifying voluntary … to self-enforcement bind with positive probability and formal contracts are used to reduce this probability. …

Work and trade relationships are often governed by relational contracts, in which incentives for cooperative action … relational contracts in buyer-seller relationships. Under incomplete information, payoffs to actions become private information … about seller costs in the laboratory, we find that such a lack of clarity has effects on the terms of relational contracts …

-specific investments in each period. We show that where, under spot transaction, formal contracts have no value because of the cooperative …