IDEAS home Printed from https://ideas.repec.org/a/eee/jaecon/v61y2016i2p369-390.html
   My bibliography  Save this article

Relational contracts with and between agents

Author

Listed:
  • Baldenius, Tim
  • Glover, Jonathan
  • Xue, Hao

Abstract

We study a dynamic multi-agent model with a verifiable team performance measure and non-verifiable individual measures. The optimal contract can be interpreted as an explicit contract that specifies a minimum bonus pool as a function of the verifiable measure and an implicit contract that gives the principal discretion to increase the size of the pool and to allocate it among the agents. To mitigate the threat of collusion, the optimal contract often converts any exogenous productive interdependence into strategic payoff independence for the agents. Under productive complements, an unconditional bonus pool (pay without performance) can be less costly than one conditioned on the verifiable team measure.

Suggested Citation

  • Baldenius, Tim & Glover, Jonathan & Xue, Hao, 2016. "Relational contracts with and between agents," Journal of Accounting and Economics, Elsevier, vol. 61(2), pages 369-390.
  • Handle: RePEc:eee:jaecon:v:61:y:2016:i:2:p:369-390
    DOI: 10.1016/j.jacceco.2016.01.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165410116000045
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jacceco.2016.01.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hayat Khan, 2019. "A Nontechnical Guide on Optimal Incentives for Islamic Insurance Operators," JRFM, MDPI, vol. 12(3), pages 1-14, July.
    2. Jonathan Glover & Eunhee Kim, 2021. "Optimal Team Composition: Diversity to Foster Implicit Team Incentives," Management Science, INFORMS, vol. 67(9), pages 5800-5820, September.
    3. Fahn, Matthias & MacLeod, W. Bentley & Muehlheusser, Gerd, 2023. "Past and Future Developments in the Economics of Relational Contracts," IZA Discussion Papers 16427, Institute of Labor Economics (IZA).
    4. Ola Kvaløy & Trond E. Olsen, 2023. "Balanced Scorecards: A Relational Contract Approach," Journal of Accounting Research, Wiley Blackwell, vol. 61(2), pages 619-652, May.
    5. Lorens A. Imhof & Matthias Kräkel, 2023. "Team Diversity and Incentives," Management Science, INFORMS, vol. 69(4), pages 2497-2516, April.
    6. Ola Kvaløy & Trond E. Olsen, 2019. "Relational Contracts, Multiple Agents, and Correlated Outputs," Management Science, INFORMS, vol. 65(11), pages 5360-5370, November.
    7. Kvaløy, Ola & Olsen, Trond E., 2023. "Relational incentive contracts for teams of multitasking agents," Discussion Papers 2023/10, Norwegian School of Economics, Department of Business and Management Science, revised 30 Jun 2023.

    More about this item

    Keywords

    C70; D82; D86; M41; Bonus pools; Relational contracts; Non-verifiable performance measures; Dynamic contracting; Relative performance evaluation;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaecon:v:61:y:2016:i:2:p:369-390. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jae .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.