TY  - RPRT
        AU  - Gächter, Simon
AU  - Kessler, Esther
AU  - Königstein, Manfred
        TI  - The Roles of Incentives and Voluntary Cooperation for Contractual Compliance
        PY  - 2011/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5774
        UR  - https://www.iza.org/publications/dp5774
        AB  - 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.
        KW  - repeated games
KW  - implicit incentives
KW  - explicit incentives
KW  - incomplete contracts
KW  - gift-exchange experiments
KW  - principal-agent games
KW  - separability
KW  - experiments
        ER  -