Relational Adaptation Under Reel Authority
Name
Reel Authority Jan 2019.pdf
Description
Accepted version
Size
999.5 KB
Format
Adobe PDF
Checksum (MD5)
0c1eee1b399903ff08d4a372e0e5cba1
Author(s)
Gibbons, Robert S.
Date Issued
May 2020
Journal
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Citation
Barron, Daniel et al. “Relational Adaptation Under Reel Authority.” Management Science, 66, 5 (May 2020): 1868-1889 © 2020 The Author(s)
Version
Author's final manuscript
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 relational adaptation that improves on adaptation decisions achieved by formal or relational contracts alone. 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 the distributor rewarding the exhibitor for adaptation decisions that improve their joint payoffs.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1287/MNSC.2019.3292
