CEPR fellow Robert Gibbons wins the third annual Deutsche Bahn Prize for Outstanding Research in Organisation and Management
Robert Gibbons (Massachusetts Institute of Technology), along with co-authors Daniel Barron (Northwester University), Ricard Gil (John Hopkins University) and Kevin J. Murphy (University of Southern California) received a €3,000 prize for their paper "Relational Adaptation under Reel Authority". The Deutsche Bahn Prize for Outstanding Research in Organisation and Management was awarded during the fourth CEPR Workshop on Incentives, Organisation, and Management, which took place at INSEAD, Fontainebleau on the 24-25th of September.
The scientific committee of the workshop said the following as to why they selected this paper for the award: “Economists have posited that relational contracts play an especially important role in complex and fast-changing environments. Theory tells us that firms in long-term relationships should engage in ex-post renegotiation to maximize surplus under changed circumstances. While compelling at a theoretical level, there is limited empirical evidence supporting relational adaptation. "Relational Adaptation under Reel Authority" constitutes an important step toward filling this void. Barron et al. analyse relationships between movie distributors (film owners) and movie exhibitors (theater owners). The formal contract between a distributor and an exhibitor sets the revenue sharing rate but allows the exhibitor to decide whether, when and in what conditions the movie will be shown. The paper documents frequent ex-post renegotiations that occur without additional formal contracting. The incidence of renegotiation is shown to depend on the opportunity cost of the exhibitors and their exercise of ex-post authority. The paper demonstrates that granular industry-level data combined with detailed institutional knowledge can be used to identify the role, scope, and determinants of relational adaptation.”
CEPR and the Scientific Committee thank the Deutsche Bahn for their generous support of this series of workshops and of the Prize, which is the first of its kind in Europe.