Internal Micro Theory Seminar

Speaker: Mauricio Ribeiro (Bristol)

Title: Designing Effective Contracts: An Experimental Study

Format: Hybrid (1B6 and Zoom)

Organisers: Mauricio

Abstract: We study how to design contracts to compete against a fixed baseline contract for the time of a group of agents. To do so, we run an experiment in which subjects choose and allocate time between pairs of simple contracts, which pay either a high or a low payoff conditional on the agent's performance in a task and a stochastic event. Our experimental design is based on a simple model of how agents choose and allocate time between these contracts. The model makes sharp predictions about the behavior of subjects in the experiment. We use our experimental results to (i) derive lessons on how to effectively design contracts, (ii) test the model, and (iii) estimate how costly the model's mistakes are to the principal.

For more information, please contact the organiser.