Relational Contracting, Negotiation, and External Enforcement

• 成果类型: Article
• 署名作者: Watson, Joel; Miller, David A.; Olsen, Trond E.
• 署名单位: University of California System; University of California San Diego; University of Michigan System; University of Michigan; Norwegian School of Economics (NHH)
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20180427
• 发表日期: 2020
• 页码: 2153-2197
• 关键词: incomplete contracts; FORMAL CONTRACTS; repeated games; RENEGOTIATION; incentives; DESIGN

摘要

We study relational contracting and renegotiation in environments with external enforcement of long-term contractual arrangements. A long-term contract governs the stage games that the contracting parties will play in the future (depending on verifiable stage-game outcomes) until they renegotiate. In a contractual equilibrium, the parties choose their individual actions rationally, jointly optimize when selecting a contract, and exercise their relative bargaining power. Our main result is that in a wide variety of settings, the optimal contract is semi-stationary, with stationary terms for all future periods but special terms for the current period. In each period the parties renegotiate to this same contract. For example, in a simple principal-agent model with a choice of costly monitoring technology, the optimal contract specifies mild monitoring for the current period but intense monitoring for future periods. Because the parties renegotiate in each new period, intense monitoring arises only off the equilibrium path after a failed renegotiation.