Hidden action and outcome contractibility: An experimental test of moral hazard theory

• 成果类型: Article
• 署名作者: Hoppe, Eva I.; Schmitz, Patrick W.
• 署名单位: University of Bonn; Centre for Economic Policy Research - UK; University of Cologne
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2018.02.006
• 发表日期: 2018
• 页码: 544-564
• 关键词: Moral hazard; hidden action; contract theory; Incentive theory; laboratory experiments

摘要

In a laboratory experiment with 754 participants, we study the canonical one-shot moral hazard problem, comparing treatments with unobservable effort to benchmark treatments with verifiable effort. In our experiment, the players endogenously negotiate contracts. In line with contract theory, the contractibility of the outcome plays a crucial role when effort is a hidden action. If the outcome is contractible, most players overcome the hidden action problem by agreeing on incentive-compatible contracts. Communication is helpful, since it may reduce strategic uncertainty. If the outcome is non-contractible, in most cases low effort is chosen whenever effort is a hidden action. However, communication leads the players to agree on larger wages and substantially mitigates the underprovision of effort. (C) 2018 The Author(s). Published by Elsevier Inc.