Trust and Contracts: Empirical Evidence

1 Trust , Communication and Contracts : Experimental Evidence

We introduce opportunities for pre-play communication and to enter binding or non-binding contracts in trust games, and find (a) communication increases trusting and trustworthiness, (b) contracts are unnecessary for trusting and trustworthy behaviors and are eschewed by many players, (c) more trusting leads to higher earnings, and (d) both trustors and trustees favor “fair and efficient” propo...

Exclusive Contracts and Vertical Restraints: Empirical Evidence and Public Policy

Empirical Effects of Performance Contracts: Evidence From China

Performance contracts (PCs)—contracts signed between the government and state enterprise managers—have been used widely in developing countries. China’s experience with such contracts was one of the largest experiments with contracting in the public sector, affecting hundreds of thousands of state firms, and offered a rare opportunity to explore how PCs work. On average PCs did not improve perf...

Contracts: an Empirical Perspective

Modern legal scholars frequently and increasingly base their analyses on the assumption, grounded largely in the extensive experimental literature, that individuals are subject to a number of systematic behavioral biases. Within the legal literature, behavioral economic analysis has been relied upon to generate a significant number of proposals for paternalistic regulation. These proposals are ...

How Contracts Influence Trust and Distrust

Despite the scholarly interest in contracts and trust governing interorganizational relationships, an understanding of how contracts influence trust remains limited by the way in which the interaction between the two constructs is conceptualized. By bringing together recent advances in the literature on interorganizational governance, I consider (a) the controlling and the coordinating dimensio...