Using Reciprocity in Principal-Agent Model

Student: Kupriianova Anna

Educational Programme: Joint HSE-NES Undergraduate Program in Economics (Bachelor)

Year of Graduation: 2016

Many firms offer to their employees not only perks and bonuses for overproducing, but also additional gifts that demonstrate principals` kindness to agent. This paper aims is based on experimental observations of reciprocal behavior and offers a model, that explains the way reciprocal effects can be used in principal-agent setting. Under a certain parameters contract that uses reciprocal effects gives principal higher profit than just bonus payments for overproducing.

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