Working Paper: CEPR ID: DP17962
Authors: Rocco Macchiavello; Ameet Morjaria
Abstract: Relational contracts - informal self-enforcing agreements sustained by repeated interactions - are ubiquitous both within and across organizational boundaries. This review highlights recent empirical contributions in selected areas. We begin by reviewing some recent work that explicitly takes the dynamic incentive compatibility constraints that underpin relational contract models to the data. We then discuss the relationship between relational contracting and firms' performance. We conclude pointing in directions that we consider to be particularly ripe for future work.
Keywords: relational contracts; contract theory; organizations
JEL Codes: D86; F14; L14; O19
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| relational contracts (L14) | firm performance (L25) |
| value of relationship (v) > temptation to deviate (A13) | relational contracts (L14) |
| DICCs (F53) | firm performance (L25) |
| relational contracts adapt in response to external shocks (L14) | firm performance (L25) |