We show experimentally that a principal?s distrust in the voluntary performance of an agent has a negative impact on the agent?s motivation to perform well. Before the agent chooses his performance, the principal in our experiment decides whether he wants to restrict the agents? choice set by...

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...

Simple bargaining games are the foundation of more complex social interactions necessary for healthy relationships and well‐functioning societies. Neuroscience research has shown that high‐level deliberative thinking processes are necessary for social‐decision making - it seems cognitively...

This paper shows that a principal's distrust in the voluntary performanceof an agent has a negative impact on the agent's motivation to perform well.

We show experimentally that a principal's distrust in the voluntary performance of an agent has a negative impact on the agent's motivation to perform well. Before the agent chooses his performance, the principal in our experiment decides whether he wants to restrict the agents' choice set by...

Several studies indicate that humans are overconfident about their own (relative) abilities. The paper proposes a notion of pragmatic beliefs, and shows through an example that this concept can shed light on why overconfidence emerges. Through the example, we also shed light on the idea that...

When there are constantly new, valuable opportunities to transact with alternative partners a situation we refer to as exchange value uncertainty long-term or committed transactions among the same individuals are discouraged. But when opportunism creates exchange hazards, which escalate in...