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on Contract Theory and Applications |
| By: | Johannes Abeler; David Huffman; Colin Raymond |
| Abstract: | Using field and laboratory experiments, we demonstrate that the complexity of incentive schemes and worker bounded rationality can affect effort provision, by shrouding attributes of the incentives. In our setting, complexity leads workers to over-provide effort relative to a fully rational benchmark, and improves efficiency. We identify con tract features, and facets of worker cognitive ability, that matter for shrouding. We find that even relatively small degrees of shrouding can cause large shifts in behavior. Our results illustrate important implications of complexity for designing and regulating workplace incentive contracts. |
| Date: | 2023–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:1012&r=cta |
| By: | Becker, Bo (Stockholm School of Economics); Josephson, Jens (Stockholm University) |
| Abstract: | Many countries’ insolvency systems focus on restructuring financial liabilities, and ignore operational liabilities such as leases and long-term supplier contracts. We model insolvency procedures with and without operational restructuring options. Such options avoid excessive liquidation of firms with significant non-financial obligations. Ex-ante, this option should increase debt capacity, especially in industries with inputs supplied under executory contract. We test this hypothesis around the introduction of a new law in Israel which facilitated the rejection of contracts, and by comparing capital structures for industries with high lease obligations between the U.S. and other countries. Empirical results confirm that operating restructuring is a key aspect of insolvency. |
| Keywords: | Bankruptcy; Restructuring; Executory contracts |
| JEL: | G32 G33 |
| Date: | 2023–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1477&r=cta |
| By: | Céline Bonnet (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Zohra Bouamra-Mechemache (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Hugo Molina (AgroParisTech) |
| Abstract: | We develop a bilateral oligopoly framework with manufacturer-retailer bargaining to analyze the impact of retail mergers on market outcomes. We show that the surplus division between manufacturers and retailers depends on three bargaining forces and can be interpreted in terms of "equilibrium of fear". We estimate our framework in the French soft drink industry and find that retailers have a higher bargaining power than manufacturers. Using counterfactual simulations, we highlight that retail mergers increase retailers' fear of disagreement which weakens their bargaining power vis-à-vis soft drink manufacturers and leads to higher wholesale and retail prices. |
| Keywords: | Bilateral oligopoly, Bargaining, Retail mergers, Soft drink industry |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03375907&r=cta |