Reciprocal contracting

Reciprocal Relationships and Mechanism Design

We study an incomplete information game in which players can coordinate their actions by contracting among themselves. We model this relationship as a reciprocal contracting procedure where each player has the ability to make commitments contingent on the other players’commitments. We characterize the outcomes that can be supported as perfect Bayesian equilibrium outcomes in this reciprocal con...

Optimal Contracting with Reciprocal Agents in a Competitive Search Model

The presented paper offers a simple search model of the labor market to explain the empirical findings on the role of reciprocity for labor market outcomes as reported by Dohmen et al. (2009). In an agency setting where profit-maximizing firms compete for heterogeneous reciprocal workers, with full information about workers’ types, reciprocal workers who are willing to engage in gift exchange a...

Social Preferences and Relational Contracting Performance: An Experimental Investigation

We examine how social preferences affect behavior and surplus in relational contracts. Experimental subjects participate in a contracting environment similar to Brown, Falk, and Fehr [Brown, M., Falk, A. & Fehr, E., “Relational Contracts and the Nature of Market Interactions, Econometrica, 72 (2004):747-780] and in social preference experiments adapted from Charness and Rabin [Charness, G. & Ra...

A folk theorem for competing mechanisms

We provide a partial characterization of the set of outcome functions that can be supported as perfect Bayesian equilibrium in the recommendation game described in Yamashita (Econometrica 2010). We show that the set of outcome functions that can be supported is at least as large as the set supportable by a mechanism designer in the sense of Myerson (Myerson 1979). We show how to support random ...

A Fractal Non-Contracting Class of Automata Groups