Search results for "contract theory"
showing 5 items of 5 documents
Employee types and endogenous organizational design: an experiment
2011
When managers are sufficiently guided by social preferences, incentive provision through an organizational mode based on informal implicit contracts may provide a cost-effective alternative to a more formal mode based on explicit contracts and active monitoring. This paper reports the results from a stylized laboratory experiment designed to test whether subjects in the role of firm owner rely on the social preferences of other (‘employee’) subjects with whom they are matched when choosing which payoff version of a simple trust game these employee subjects should play (‘the organizational mode’). Our main finding is that they do so, albeit in a different way than theory predicts. The import…
2017
The concept of integrated profit offers a theoretical framework for a holistic analysis of contract goals between agricultural producers’ groups and agri-food sector. The theoretical background applied in this paper is the contract theory. The primary purpose being the identification of vertical coordination forms between producers’ organizations and agri-food sector. Consequently, the specific goal was to recognize price mechanisms in contracts and their analysis in the context of the integrated profit (only in the field of coordination). The research focused on contracts signed in 2014 between groups operating on poultry market and their first buyers. The survey (collection of primary dat…
Incentive Mechanism for Resource Allocation in Wireless Virtualized Networks with Multiple Infrastructure Providers
2020
To accommodate the explosively growing demands for mobile traffic service, wireless network virtualization is proposed as the main evolution towards 5G. In this work, a novel contract theoretic incentive mechanism is proposed to study how to manage the resources and provide services to the users in the wireless virtualized networks. We consider that the infrastructure providers (InPs) own the physical networks and the mobile virtual network operator (MVNO) has the service information of the users and needs to lease the physical radio resources for providing services. In particular, we utilize the contract theoretic approach to model the resource trading process between the MVNO and multiple…
How Long-Term Contracts can Mitigate Inefficient Renegotiation Arising Due to Loss Aversion
2021
A loss-averse buyer and seller face an uncertain environment. Should they write a long-term contract or wait until the state of the world is realized? I show that simple long-term contracts perform better than insinuated in Herweg and Schmidt (2015), even though loss aversion makes renegotiation sometimes inefficient. During renegotiation, the outcome induced by the long-term contract constitutes the reference point to which the parties compare gains and losses induced by the renegotiated transaction. Whereas Herweg and Schmidt consider that the long-term contract is always performed, it should not in "bad" states. This alters the threat point in renegotiation, making it easier to renegotia…