The Interaction of Explicit and Implicit ContractsKlaus
نویسندگان
چکیده
We analyze explicit and implicit contracts in a repeated principal-agent model with observable but only partially contractible actions of the agent. It is shown that the set of implementable actions may increase or decrease if additional actions become contractible. We would like to thank Bengt Holmstrr om who stimulated this research several years ago by telling an anecdote about the insuuciency of implicit contracts when explicit contracts are available. We also would like to thank Bentley MacLeod for helpful comments and discussion. Financial support by Deutsche Forschungsgemeinschaft, SFB 303 at the University of Bonn, is gratefully acknowledged.
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