TY - JOUR
T1 - The role of personal and impersonal relational contracts on partner selection and efficiency
AU - Muñoz-Herrera, Manuel
AU - Reuben, Ernesto
N1 - Publisher Copyright:
© The Author(s) 2023. Published by Oxford University Press on behalf of Yale University. All rights reserved.
PY - 2024/11/1
Y1 - 2024/11/1
N2 - In this article, we use a laboratory experiment to study the effects of relational contracts on market efficiency in environments with different degrees of contract enforceability and market competition. By exogenously varying the communication protocol, we create relational contracts that are more personal or impersonal. On the one hand, personal relational contracts improve efficiency by promoting trust and coordination. On the other hand, impersonal relational contracts increase efficiency by facilitating the severance of trading relationships when more productive competitors enter the market. Therefore, the overall effect on market efficiency depends on the relative importance of competition and agreement enforceability (JEL D91, L22, L14).
AB - In this article, we use a laboratory experiment to study the effects of relational contracts on market efficiency in environments with different degrees of contract enforceability and market competition. By exogenously varying the communication protocol, we create relational contracts that are more personal or impersonal. On the one hand, personal relational contracts improve efficiency by promoting trust and coordination. On the other hand, impersonal relational contracts increase efficiency by facilitating the severance of trading relationships when more productive competitors enter the market. Therefore, the overall effect on market efficiency depends on the relative importance of competition and agreement enforceability (JEL D91, L22, L14).
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U2 - 10.1093/jleo/ewad011
DO - 10.1093/jleo/ewad011
M3 - Article
AN - SCOPUS:85209653028
SN - 8756-6222
VL - 40
SP - 753
EP - 785
JO - Journal of Law, Economics, and Organization
JF - Journal of Law, Economics, and Organization
IS - 3
ER -