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- Publisher Website: 10.1016/j.jet.2017.02.006
- Scopus: eid_2-s2.0-85014123503
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Article: Relational contracts, limited liability, and employment dynamics
Title | Relational contracts, limited liability, and employment dynamics |
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Authors | |
Keywords | Limited liability Efficiency wages Relational contracts |
Issue Date | 2017 |
Citation | Journal of Economic Theory, 2017, v. 169, p. 270-293 How to Cite? |
Abstract | © 2017 Elsevier Inc. This paper studies a relational contracting model in which the agent is protected by a limited liability constraint. The agent's effort is his private information and affects output stochastically. We characterize the optimal relational contract and compare the dynamics of the relationship with that under the optimal long-term contract. Under the optimal relational contract, the relationship is less likely to survive, and the surviving relationship is less efficient. In addition, relationships always converge to a steady state under the optimal long-term contract, but they can cycle among different phases under the optimal relational contract. |
Persistent Identifier | http://hdl.handle.net/10722/269757 |
ISSN | 2023 Impact Factor: 1.4 2023 SCImago Journal Rankings: 3.218 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Fong, Yuk fai | - |
dc.contributor.author | Li, Jin | - |
dc.date.accessioned | 2019-04-30T01:49:30Z | - |
dc.date.available | 2019-04-30T01:49:30Z | - |
dc.date.issued | 2017 | - |
dc.identifier.citation | Journal of Economic Theory, 2017, v. 169, p. 270-293 | - |
dc.identifier.issn | 0022-0531 | - |
dc.identifier.uri | http://hdl.handle.net/10722/269757 | - |
dc.description.abstract | © 2017 Elsevier Inc. This paper studies a relational contracting model in which the agent is protected by a limited liability constraint. The agent's effort is his private information and affects output stochastically. We characterize the optimal relational contract and compare the dynamics of the relationship with that under the optimal long-term contract. Under the optimal relational contract, the relationship is less likely to survive, and the surviving relationship is less efficient. In addition, relationships always converge to a steady state under the optimal long-term contract, but they can cycle among different phases under the optimal relational contract. | - |
dc.language | eng | - |
dc.relation.ispartof | Journal of Economic Theory | - |
dc.subject | Limited liability | - |
dc.subject | Efficiency wages | - |
dc.subject | Relational contracts | - |
dc.title | Relational contracts, limited liability, and employment dynamics | - |
dc.type | Article | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1016/j.jet.2017.02.006 | - |
dc.identifier.scopus | eid_2-s2.0-85014123503 | - |
dc.identifier.volume | 169 | - |
dc.identifier.spage | 270 | - |
dc.identifier.epage | 293 | - |
dc.identifier.eissn | 1095-7235 | - |
dc.identifier.isi | WOS:000401394800011 | - |
dc.identifier.issnl | 0022-0531 | - |