Relational Contract and Endogenous Contractual Incompleteness. Experimental Evidence.

Numéro: 2011-5

Relational Contract and Endogenous Contractual Incompleteness. Experimental Evidence.

Jean Beuve and Claudine Desrieux

Abstract: This paper empirically investigates the interaction between relational contracting and endogenous contractual incompleteness. To account for contractual relationships with perspective of future interactions, we design an infinitely repeated games experiment between identifiable players.

In this experiment, the probability of continuation and the level of shared information vary over the treatments. The level of contractual completeness is decided by participants at each period. Our results show that past interactions are a stronger determinant of the level of investment in contractual completeness than the perspective offuture business.

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Chaire EPPP

Author: Chaire EPPP

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