Building an Equilibrium: Rules vs. Principles in Relational Contracts

The authors are very grateful for comments from Sylvain Chassang and Todd Zenger, as well as seminar participants at the Stanford Center for Advanced Study in the Behavioral Sciences (CASBS) Summer Institute (2016), Ludwig Maximilian University Munich, University of Innsbruck, Paris School of Economics, Institut Européen d’Administration des Affaires (INSEAD), Society for Institutional & Organizational Economics (SIOE) in Stockholm (2019), the Organization Science Special Issue Online Conference (2020), Centre for Economic Policy Research (CEPR), the 6th Workshop on Relational Contracts in Moscow (2020), Groupe d’Analyse et de Théorie Economique (GATE) Lyon-St-Etienne, Harvard Business School, and Tilburg University. The authors also thank Lino Eden, Eleonora Egli, and Elise Moret, as well as Stefan Wehrli and the staff at the Eidgenössische Technische Hochschule (ETH) Zurich’s Decision Science lab for excellent research assistance and administrative support, and they gratefully acknowledge financial support from the Massachusetts Institute of Technology (MIT) Sloan School’s Program on Innovation in Markets and Organizations. Prior to data collection, the experiment reported in this paper received Institutional Review Board approval from ETH Zurich’s Ethikkommission (EK 2017-N-04) and MIT’s Committee on the Use of Humans as Experimental Subjects (COUHES #: 1704912215).