Year of Graduation
Using Reciprocity in Principal-Agent Model
Joint HSE-NES Undergraduate Program in Economics
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.