Determinants of Relational Contract Performance: Experimental Evidence

This study examines the determinants of relational contractual performance using data from a series of laboratory experiments. There is currently limited empirical evidence on the determinants of contractual performance, which includes contractual acceptance, and the delivery of promised quantity/quality under the terms of the contract. While theory predicts that the primary drivers of contractual performance are high discount factors, and contract designs that obey individual rationality and self-enforcement constraints, the empirical analysis suggests that other determinants such as a history of prior cooperation can matter as much, if not more, than the theoretical constraint conditions.