Arbeitspapier
The interaction of explicit and implicit contracts: A signaling approach
We analyze the interaction of explicit and implicit contracts in a model with selfish and fair principals. Fair principals are willing to honor implicit agreements, whereas selfish principals are not. Principals are privately informed about their types. We investigate a separating equilibrium in which principals reveal their type through the contract o er to the agent. If this equilibrium is played, explicit and implicit contracts are substitutes. Since the agent learns the principal's type, a selfish principal has to rely on explicit incentives. A fair principal, by contrast, can effectively induce implicit incentives and hence does not need to use explicit incentives. Interestingly, if a selfish principal can rely on more effective explicit incentives, a fair principal becomes more likely to be able to separate from the selfish type and, hence, to make better use of implicit incentives. In this sense, there is a strategic complementarity between explicit and implicit incentives.
- Language
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Deutsch
- Bibliographic citation
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Series: Working Paper Series ; No. IF38V1
- Classification
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Wirtschaft
Asymmetric and Private Information; Mechanism Design
Economics of Contract: Theory
Personnel Economics: Compensation and Compensation Methods and Their Effects
- Subject
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explicit contracts
implicit contracts
separating equilibrium
substitutes
strategic
complementarity
- Event
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Geistige Schöpfung
- (who)
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Gürtler, Marc
Gürtler, Oliver
- Event
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Veröffentlichung
- (who)
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Technische Universität Braunschweig, Institut für Finanzwirtschaft
- (where)
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Braunschweig
- (when)
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2012
- DOI
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doi:10.2139/ssrn.2031582
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Gürtler, Marc
- Gürtler, Oliver
- Technische Universität Braunschweig, Institut für Finanzwirtschaft
Time of origin
- 2012
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Explicit Evidence on an Implicit Contract
Explicit Evidence of an Implicit Contract
Explicit Evidence on an Implicit Contract
Explicit evidence of an implicit contract
Knowledge annotation: making implicit knowledge explicit
Implicit and Explicit Stances in Logic