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Type	Working Paper
Scope	Discipline-based scholarship
Title	Efficient Contracting and Fair Play in a Simple Principal-Agent Experiment
Organization Unit	Department of Economics (Florian Scheuer)
Authors	Vital Anderhub Simon Gächter Manfred Königstein
Language	English
Institution	University of Zurich
Series Name	Working paper series / Institute for Empirical Research in Economics
Number	No. 18
ISSN	1424-0459
Date	2000
Abstract Text	We study behavior within a simple principal--agent experiment. Our design allows for a large class of linear contracts. Principals can offer any feasible combination of (negative) fixed wages and incentives in the form of return sharing. This great contractual flexibility allows us to study incentive compatibility simultaneously with issues of `fair sharing' and reciprocity, which were previously found to be important. We find a high degree of incentive-compatible behavior, but also `fair sharing' and reciprocity. In contrast to other incentive devices studied in the literature, the incentives are `reciprocity-compatible'. Principals recognize the agency problem and react accordingly.
Official URL	http://www.econ.uzh.ch/wp.html
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