(Tuesday, 1st January 2002)
Two streams of actual research in experimental economics shall be discussed. The first one is about Investment behavior in a hold up context: it shall be shown that investment behavior deviates from the standard theoretical predictions and that the choice of the particular bargaining game is very important. The second one will develop endogenous choice of incomplete contracts: it shall be shown that incomplete contracts often outperform complete incentive contracts. Economic agents understand this and, consequently, consciously choose incomplete contracts.
Bibliographical references :
Fehr, E., A. Klein and K.M. Schmidt, "Fairness, Incentives and Contractual Incompleteness" in working paper U. Munich, (2001).
Fehr, E. and K.M. Schmidt, "Fairness, incentives, and contractual choices", EER, 44, 1057-1068, (2000).
Sloof, R., J. Sonnemans and H. Oosterbeek, "Specific investments, holdup, and the outside option principle", in working paperU. Amsterdam, (2001).
Sonnemans, J., H. Oosterbeek and R. Sloof, "On the relation between asset ownership and specific investments", EconJ, 111, 791-820, (2001).