IAE Paris/Chaire EPPP
Relational Contract and Endogenous Contractual Incompleteness. Experimental Evidence.
Jean Beuve (Gregor, IAE paris) & Claudine Desrieux (ERMES, TEPP, Université Paris II)
Abstract: This paper empirically investigates the interaction between relational contracting and voluntary incomplete contract. We design an infinitely repeated games experiment between identifiable players, where the probability of continuation and the level of shared information vary and where the level of contractual completeness is decided by participants. Our results are consistent with the relational contract theory but also show that levels of contractual incompleteness are endogenously determined and vary across relationships.