@techreport{Kragl2006Relational,
abstract = {We study the effects of envy on the feasibility of relational contracts in a standard moral hazard setup with two agents. Performance is evaluated via an observable, but non-contractible signal which reflects the agent's individual contribution to firm value. Both agents exhibit disadvantageous inequity aversion. In contrast to the literature, we find that inequity aversion may be beneficial: In the presence of envy, for a certain range of interest rates relational contracts may be more profitable. Furthermore, for some interest rates reputational equilibria exist only with inequity averse agents.},
address = {Berlin},
author = {Jenny Kragl and Julia Schmid},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {D63; D82; M52; M54; 330; principal-agent; relational contract; inequity aversion; envy},
language = {eng},
number = {2006,085},
publisher = {SFB 649, Economic Risk},
title = {Relational contracts and inequity aversion},
type = {SFB 649 discussion paper},
url = {http://hdl.handle.net/10419/25168},
year = {2006}
}
