Testing Contract Theory: A Survey of Some Recent Work

@article{Chiappori2002TestingCT,
  title={Testing Contract Theory: A Survey of Some Recent Work},
  author={Pierre-Andre Chiappori and Bernard Salani{\'e}},
  journal={Microeconomic Theory eJournal},
  year={2002}
}
While the theoretical literature on contracts has been enormous since the seventies, empirical tests of the theory have long remained scarce. However, new empirical work has been developed in the last ten years that sheds light on the empirical validation of the theory. This paper aims at surveying the recent empirical work on contracts. The focus throughout is on the need to properly account for unobserved heterogeneity. 

Contract Dynamics: Lessons From Empirical Analyses

The recognition that contracts have a time dimension has given rise to a very abundant literature since the end of the 1980s. In such a dynamic context, the contract may take place over several

The Governance of Contracts: Empirical Evidence on Technology Licensing Agreements

This paper provides new evidence on the contractual governance of technology licensing agreements. Based upon an international sample of licensing contracts, we explore how the contractual design

Asymmetric Information – Adverse Selection Problem

The present paper makes an introduction in the contract theory starting with the definitions of asymmetric information and some of the problems that generate: moral hazard and adverse selection. We

Empirical Strategies in Contract Economics: Information and the Boundary of the Firm

What determines the boundaries of the firm? Over the past 25 years, many papers have examined this question. Benjamin Klein et al. (1978) and Oliver E. Williamson (1979, 1985) propose that firms

The provision of wage incentives: A structural estimation using contracts variation

We address empirically the issues of the optimality of simple linear compensation contracts and the importance of asymmetries between firms and workers. For that purpose, we consider contracts

Gathering Information Before Signing a Contract: Experimental Evidence

A central insight of agency theory is that when a principal offers a contract to a privately informed agent, the principal trades off ex post efficiency in the bad state of nature against a larger

The incentive effects of long-term contracts on performance-Evidence from a natural experiment in European Soccer∗

The empirical analysis of the impact of long-term contracts on performance is challenging because better players have, on average, longer contracts, which complicates the separation of selection and

Beyond Testing: Empirical Models of Insurance Markets

This new research proposes ways to estimate individual demand for insurance and the relationship between prices and insurer costs in the presence of adverse and advantageous selection.
...

References

SHOWING 1-10 OF 120 REFERENCES

Empirical contract theory: The case of insurance data

Econometric Models of Insurance under Asymmetric Information

The paper surveys recent empirical studies that test for or evaluate the importance of asymmetric information in insurance relationships. I first discus the main conclusions reached by insurance

Endogenous Matching and the Empirical Determinants of Contract Form

Empirical work on contracts typically regresses contract choice on observed principal and agent characteristics. If (i) some of these characteristics are unobserved or partially observed and (ii)

Testing for Asymmetric Information in Insurance Markets

The first goal of this paper is to provide a simple and general test of the presence of asymmetric information in contractual relationships within a competitive context. We also argue that insurance

Reputation Effects and the Limits of Contracting: A Study of the Indian Software Industry

This paper examines evidence of the role that reputation plays in determining contractual outcomes. We conduct an empirical analysis of the Indian customized software industry, using a data set we

Empirical Strategies in Contract Economics: Information and the Boundary of the Firm

What determines the boundaries of the firm? Over the past 25 years, many papers have examined this question. Benjamin Klein et al. (1978) and Oliver E. Williamson (1979, 1985) propose that firms

The Provision of Incentives in Firms

This paper provides an overview of the existing theoretical and empirical work on the provision of incentives. It reviews the costs and benefits of many types of pay-for-performance, such as piece

Empirical Research in Transaction Cost Economics: A Review and Assessment

This paper summarizes and assesses the growing body of empirical research in transaction cost economics (TCE). Originally an explanation for the scale and scope of the firm, TCE is now used to study

The Role of Commitment in Dynamic Contracts: Evidence from Life Insurance

We look at the life insurance industry to study the properties of long term contracts in a world where consumers cannot commit to a contract. The main issue is how contracts are designed to deal with

A Theory of Wage Dynamics

A dynamic, equilibrium model of long term (implicit) labour contracts under incomplete but symmetric information is developed. Workers are assumed to be risk averse and of unknown ability or
...