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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Contracts, reference points, and competition—behavioral effects of the fundamental transformation |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Journal of the European Economic Association |
| Publisher | MIT Press |
| Geographical Reach | international |
| ISSN | 1542-4766 |
| Volume | 7 |
| Number | 2-3 |
| Page Range | 561 - 572 |
| Date | 2009 |
| Abstract Text | In this paper we study the role of incomplete ex ante contracts for ex post trade. Previous experimental evidence indicates that a contract provides a reference point for entitlements when the terms are negotiated in a competitive market. We show that this finding no longer holds when the terms are determined in a non-competitive way. Our results imply that the presence of a “fundamental transformation” (i.e., the transition from a competitive market to a bilateral relationship) is important for a contract to become a reference point. To the best of our knowledge this behavioral aspect of the fundamental transformation has not been shown before. |
| Digital Object Identifier | 10.1162/JEEA.2009.7.2-3.561 |
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| Additional Information | Copyright: MIT Press |