Download This PaperRelational Adaptation Under Reel Authority
Johns Hopkins Carey Business School Research Paper No. 18-06
USC CLASS Research Papers Series No. CLASS18-9
USC Legal Studies Research Papers Series No. 18-9
64 Pages Posted: 16 Apr 2018 Last revised: 23 Jul 2018
Date Written: April 18, 2018
Abstract
We study relationships between parties who have different preferences about how to tailor decisions to changing circumstances. Our model suggests that relational contracts supported by formal contracts may achieve efficient relational adaptation. Our empirics consider revenue-sharing contracts between movie distributors and an exhibitor. The exhibitor has discretion about whether and when to show a movie, and the parties frequently renegotiate formal contracts after a movie has finished its run. We document that such ex post renegotiation is consistent with rewarding the exhibitor for making efficient adaptation decisions.
Keywords: adaptation, renegotiation, relational contracts
JEL Classification: L14, L22, L23
Suggested Citation: Suggested Citation
Robert S. Gibbons
Massachusetts Institute of Technology - Sloan School and Department of Economics ( email )
E52-432
MIT
Cambridge, MA 02142
United States
617-253-0283 (Phone)
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Ricard Gil
Queen's University (Canada) - Smith School of Business ( email )
Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada
Kevin J. Murphy (Contact Author)
University of Southern California - Marshall School of Business ( email )
BRI 308, MC 0804
Los Angeles, CA 90089-0804
United States
213-740-6553 (Phone)
213-740-6650 (Fax)
USC Gould School of Law
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