%0 Report
        %A Gächter, Simon
%A Kessler, Esther
%A Königstein, Manfred
        %T The Roles of Incentives and Voluntary Cooperation for Contractual Compliance
        %D 2011
        %8 2011 Jun
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 5774
        %U https://www.iza.org/publications/dp5774
        %X Efficiency under contractual incompleteness often requires voluntary cooperation in situations where self-regarding incentives for contractual compliance are present as well. Here we provide a comprehensive experimental analysis based on the gift-exchange game of how explicit and implicit incentives affect cooperation. We first show that there is substantial cooperation under non-incentive compatible contracts. Incentive-compatible contracts induce best-reply effort and crowd out any voluntary cooperation. Further experiments show that this result is robust to two important variables: experiencing Trust contracts without any incentives and implicit incentives coming from repeated interaction. Implicit incentives have a strong positive effect on effort only under non-incentive compatible contracts.
        %K repeated games
%K implicit incentives
%K explicit incentives
%K incomplete contracts
%K gift-exchange experiments
%K principal-agent games
%K separability
%K experiments