We examine how social preferences affect behavior and surplus in relational contracts. Experimental subjects participate in a contracting environment similar to Brown, Falk, and Fehr [Brown, M., Falk, A. & Fehr, E., “Relational Contracts and the Nature of Market Interactions, Econometrica, 72 (2004):747-780] and in social preference experiments adapted from Charness and Rabin [Charness, G. & Ra...

The present study identifies the richness levels of various Internet media and empirically examines the moderating effects of Internet media richness (rich and lean media) and Internet communication governance mechanisms (legal contracts and relational norms) on the relationships between rich and lean information communication, and exchange outcomes. This study uses regression analysis to analy...

Thinking about contingencies, designing covenants and seeing through their implications is costly. Parties to a contract accordingly use heuristics and leave it incomplete. The paper develops a model of bounded rationality and examines its consequences for contractual design. It is argued that cognition is a natural source of adverse selection in contractual relationships, that contracts may be...

This paper examines multiple contract design choices in the context of transaction and relational attributes and consequent ex ante and ex post transaction costs. It focuses on two understudied themes in the IT outsourcing literature. First, while the literature is predominantly concerned with opportunism and consequent ex post hazard costs that contracts can safeguard against, parties to a con...

Over the past decade, there has been a rapid increase in the number of initiatives involving "for-profit" private health care providers in national tuberculosis (TB) control efforts. We reviewed 15 such initiatives with respect to contractual arrangements, quality of care and success achieved in TB control. In seven initiatives, the National TB Programme (NTP) interacted directly with for-profi...

Purpose: This paper explores whether the concept of psychological contracts underpinned by relational/transactional exchanges provides an adequate description of knowledge workers’ contracts. Methodology: The research approach uses interviews with 10 scientists from within a pre-eminent Australian scientific research and development organisation, the Commonwealth Scientific & Industrial Researc...

Purpose: To explore the implications for all employees’ psychological contracts of a forced change from permanent to temporary employment status for some employees within an organisation. Methodology/Approach: A random sample of 30 employees, stratified by employment status was selected. Each employee undertook a structured card sort of possible emotional responses to change followed by an in-d...

The literature on relational incentive contracts suggests that rms may be able to condition payments to employees on information that is not available to those outside the rm. Given this, market participants may use the magnitude of such payments to infer the non-public information, which then may give rms a reason to choose wage payments strategically. We combine the literatures on relational ...