We provide evidence on how two important types of institutions – dismissal barriers, and bonus pay - affect contract enforcement behavior in a market with incomplete contracts and repeated interactions. Dismissal barriers are shown to have a strong negative impact on worker performance, and...

Most contracts that individuals enter into are not written from scratch; rather, they depend upon forms and terms that have been successful in the past. In this paper, we study the structure of form construction contracts published by the American Institute of Architects (AIA). We show that...

Most contracts that individuals enter into are not written from scratch; rather, they depend upon forms and terms that have been successful in the past. In this paper, we study the structure of form onstruction contracts published by the American Institute of Architects (AIA). We show that these...

Labor management practices in Japan are quite different from those in the United States. Based on recent developments in contract theory, we develop a conceptual framework to understand why the differences have been maintained for a long period time. Our basic message is that the American and...

Models of spatial competition have proven useful in describing differentiated product markets. A serious problem is the nonexistence of Nash equilibria. This problem is resolved by modelling the price formation process using the core. The equilibrium is the outcome of a two-stage process. In the...

In this paper the set of bilateral wage contracts in a dynamic model with observable effort is characterized. Our first result demonstrates that bond payments and severance pay do not increase the size of the set of incentive compatible contracts. Second, we show that unobservable effort can...

This paper studies the effect that a labour market for older workers will have on the ratchet effect. Even though we assume that the information on worker type that a firm obtains will not be transmitted to the other firms, the presence of the ex post labour market eliminates the ratchet effect....