Relational Contracts and Reputational Games

ISBN-13: 9783659416293 / Angielski / Miękka / 2013 / 88 str.

De Maio Dario G.

Opis

Relational contracts are defined as the set of unwritten codes of conduct that affects parties behavior during a business. The existence of these contracts is motivated by the impossibility of predicting all the contingencies that may occur after a formal agreement is stipulated. As widely recognized in the economic literature, the incompleteness of written contracts can give rise to opportunistic behaviors of a party, that reduce the margins for the conclusion of efficient transactions. The adverse selection, moral hazard and hold-up problems are typical examples of contractual opportunism. This book provides an essay on the important role that informal mechanisms may have in mitigating contractual incompleteness and supporting transactions. The basic literature is followed by a formal model aimed at studying the incentives that reputation can generate on the firms decision to invest in the quality of its products. The ultimate scope of the book is to shed some light on business practices and provide discussion materials to the industrial organization scholars community.

O autorze

Dario G. De Maio currently works as economist at the Department of Regulatory Affairs at Terna S.p.a. and as professional consultant at the Authority for Electricity and Gas in Italy. He is also a Phd Student at IMT Institute for Advanced Studies in Lucca. His research interests focus on the design of a wide variety of markets and industries.