Renegotiation and conflict resolution in relational contracting

• 成果类型: Article
• 署名作者: Zhao, Rui R.
• 署名单位: State University of New York (SUNY) System; University at Albany, SUNY
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2012.02.008
• 发表日期: 2012
• 页码: 964-983
• 关键词: Repeated principal-agent; Self-enforcing contracts; RENEGOTIATION; Private evaluation

摘要

Renegotiation and conflict resolution are studied in relational contracting under subjective evaluation. Renegotiation has three effects. First, it makes the incentive pay scheme low powered: the maximum variation of compensation across performance levels is compressed and the contract is less extreme compared to the case without renegotiation. This effect is stronger when the players are less patient. Second, renegotiation typically renders termination impossible; the contract relies on a low-morale mechanism to enforce mutual cooperation. Finally, renegotiation compels the players to resolve their conflicts by selecting a contract that maximizes the lowest possible surplus along the path of the contract. (C) 2012 Elsevier Inc. All rights reserved.