Relational Contracts: Reputation and Renegotiation

David G. Pearce, Ennio Stacchetti

    Research output: Contribution to journalArticlepeer-review


    This paper outlines some thoughts on relational contracts. Such a contract can involve an implicit agreement to behave in certain ways, that includes the use of explicit, legally enforceable contracts, which may be rewritten as play proceeds. The use of implicit contracts involves a series of challenges not encountered with a legal contract that irrevocably specifies all contingent behavior. What agreements are credible? What threatened punishments will withstand efforts to rene-gotiate? To what extent can a long-run player establish a reputation for a partic-ular kind of behavior? Can information design and Bayesian persuasion usefully be viewed through this lens?.

    Original languageEnglish (US)
    Pages (from-to)562-578
    Number of pages17
    JournalJournal of Institutional and Theoretical Economics
    Issue number3-4
    StatePublished - 2023


    • implicit contracts
    • relational contracts
    • renegotiation
    • repeated games
    • reputation

    ASJC Scopus subject areas

    • Economics and Econometrics


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