Contracting with Opportunistic Partners: Theory and Application to Technology Development and Innovation

• 成果类型: Article
• 署名作者: Casas-Arce, Pablo; Kittsteiner, Thomas; Asis Martinez-Jerez, F.
• 署名单位: Arizona State University; Arizona State University-Tempe; RWTH Aachen University; University of Notre Dame
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2017.2967
• 发表日期: 2019
• 页码: 842-858
• 关键词: opportunism; incomplete contracts; INNOVATION

摘要

After a contract is signed, contracting partners may engage in opportunistic behavior aimed at circumventing the original intention of the agreement governing their business relationship, complying with the letter but not the spirit of the contract. We use an incomplete contracts approach to show that the anticipation and observability of such behavior are typically not enough to prevent it when parties can renegotiate contractual outcomes. This is because contractually specified incentives inevitably have conflicting effects: they simultaneously increase the likelihood of welfare-improving investments and welfare-reducing opportunistic behavior. The possibility of such opportunism thus limits the effectiveness of contractual incentives. We also discuss how our results relate to contracting practices observed in industries characterized by rapid innovation, such as information technology.