Role of Information Rents in Relational Contracts

B-Tier
Journal: Journal of Economics & Management Strategy
Year: 2016
Volume: 25
Issue: 4
Pages: 936-957

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We study a repeated contracting model in which the agent has private information and the performance measure is unverifiable. In an optimal stationary contract, when the discount factor is not high, the principal's objective shifts from purely reducing the information rent toward increasing the total surplus to sustain the relational contract. As a result, the total surplus is not monotonically increasing in the discount factor and could decrease when the unverifiable performance measure becomes verifiable.

Technical Details

RePEc Handle
repec:bla:jemstr:v:25:y:2016:i:4:p:936-957
Journal Field
Industrial Organization
Author Count
1
Added to Database
2026-01-25