Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2009-04-14 Number: 09-030/1 Author-Name: Randolph Sloof Author-Workplace-Name: University of Amsterdam Author-Name: Joep Sonnemans Author-Workplace-Name: University of Amsterdam Title: The Interaction between Explicit and Relational Incentives: An Experiment Abstract: This discussion paper resulted in a publication in 'Games and Economic Behavior', 73(2), 573-94.
We consider repeated trust game experiments to study the interplay between explicit and relational incentives. After having gained experience with two payoff variations of the trust game, subjects in the final part explicitly choose which of these two variants to play. Theory predicts that subjects will choose the payoff dominated game (representing a bad explicit contract), because this game better sustains (implicit) relational incentives backed by either reputational or reciprocity considerations. We also explicitly test how game choice is affected by the length of the repeated game. Classification-JEL: C91, M52, J41 Keywords: relational contracts, explicit incentives, crowding out, experiments File-Url: http://papers.tinbergen.nl/09030.pdf File-Format: application/pdf File-Size: 339077 bytes Handle: RePEc:tin:wpaper:20090030