Petra Nieken and Patrick W. Schmitz
Games and Economic Behavior, Vol. 75 (2), 2012, 1000–1008.
Abstract. This paper reports data from a laboratory experiment on two-period moral hazard problems. We investigate the role of long-term contracts with and without memory. The findings corroborate the contract-theoretic insight that even though the periods are technologically unrelated, due to incentive considerations principals may prefer to offer contracts with memory.
The working paper version is available for download (CEPR Discussion Paper 8241).
The paper is available for download.