provide powerful incentives and are superior to explicit incentive contracts when there are some fair-minded players. But …, which offer important new insights into the interaction of contract choices, fairness and incentives. …We show experimentally that fairness concerns may have a decisive impact on the actual and optimal choice of contracts …

We show that concerns for fairness may have dramatic consequences for the optimal provision of incentives in a moral … hazard context. Incentive contracts that are optimal when there are only selfish actors become inferior when some agents are … concerned about fairness. Conversely, contracts that are doomed to fail when there are only selfish actors provide powerful …

contract enforcement device. It turns out that reciprocity generates a significant increase in effort levels relative to the … prediction based on selfish preferences. Moreover, it gives rise to a considerable mitigation of the contract enforcement problem …

this and predominantly choose the bonus contracts, even preferring a pure bonus contract over a contract that combines the … enforcement power of explicit and implicit incentives. This contract preference is associated with the fact that explicit … contracts in a moral hazard context. Explicit incentive contracts that are optimal according to self-interest theory become …

During the last two decades economists have made much progress in understanding incentives, contracts and organisations … effects of incentives. Economists may fail to understand the levels and the changes in behaviour if they neglect motives like … the desire to reciprocate or the desire to avoid social disapproval. We show that monetary incentives may backfire and …

unenforcable bonus contract or to combine the bonus contract with a fine if the agent's effort falls below a minimum standard. We … show that most principals do not use the fine and that the pure bonus contract is more efficient than the combined contract …. Our experiment suggests that principals who are less fair are more likely to choose a combined contract and less likely to …

Under weak contract enforcement the trading parties’ trust, defined as their belief in other’s trustworthiness, appears … important for realizing gains from trade. In contrast, under strong contract enforcement beliefs about other’s trustworthiness … appear less important, suggesting that trust and contract enforcement are substitutes. Here we show, however, that trust and …

Under weak contract enforcement the trading parties' trust, defined as their belief in other's trustworthiness, appears … important for realizing gains from trade. In contrast, under strong contract enforcement beliefs about other's trustworthiness … appear less important, suggesting that trust and contract enforcement are substitutes. Here we show, however, that trust and …

Under weak contract enforcement the trading parties' trust, defined as their belief in other's trustworthiness, appears … important for realizing gains from trade. In contrast, under strong contract enforcement beliefs about other's trustworthiness … appear less important, suggesting that trust and contract enforcement are substitutes. Here we show, however, that trust and …

Under weak contract enforcement the trading parties’ trust, defined as their belief in other’s trustworthiness, appears … important for realizing gains from trade. In contrast, under strong contract enforcement beliefs about other’s trustworthiness … appear less important, suggesting that trust and contract enforcement are substitutes. Here we show, however, that trust and …