We show experimentally that fairness concerns may have a decisive impact on the actual and optimal choice of contracts … in a moral hazard context. Bonus contracts that offer a voluntary and unenforceable bonus for satisfactory performance … provide powerful incentives and are superior to explicit incentive contracts when there are some fair-minded players. But …

contracts in a moral hazard context. Explicit incentive contracts that are optimal according to self-interest theory become … inferior when some agents value fairness. Conversely, implicit bonus contracts that are doomed to fail among purely selfish … this and predominantly choose the bonus contracts, even preferring a pure bonus contract over a contract that combines the …

Several recent papers argue that contracts provide reference points that affect ex post behavior. We test this … effect of contracts on bargaining threatpoints. We compare situations in which an initial contract is renegotiated to …

Several recent papers argue that contracts provide reference points that affect ex post behavior. We test this … effect of contracts on bargaining threatpoints. We compare situations in which an initial contract is renegotiated to …

Several recent papers argue that contracts provide reference points that affect ex post behavior. We test this … effect of contracts on bargaining threatpoints. We compare situations in which an initial contract is renegotiated to …

Several recent papers argue that contracts provide reference points that affect ex post behavior. We test this … effect of contracts on bargaining threatpoints. We compare situations in which an initial contract is renegotiated to …