DP8241 Repeated moral hazard and contracts with memory: A laboratory experiment
| Author(s): | Petra Nieken, Patrick W. Schmitz |
| Publication Date: | February 2011 |
| Keyword(s): | Laboratory experiment, Repeated moral hazard, Sequential hidden actions |
| JEL(s): | D82, J33 |
| Programme Areas: | Industrial Organization |
| Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=8241 |
This paper reports data from a laboratory experiment on two-period moral hazard problems. The findings corroborate the contract-theoretic insight that even though the periods are technologically unrelated, due to incentive considerations principals may prefer to offer contracts with memory.