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Behaviour, perceptions, cognition, knowledge, organizations. Relational contracting approach to design of contractual forms when information is imprecise.

Project description

For safer relational contracting following initial uncertainty

Today, many innovative enterprises opt to act under the scheme of relational contracting that is based upon a relationship, trust and the understanding of parties. It eases the dynamic development of goals and cooperation in novel actions like research and development, adoption of new technologies and drafting of rules. But such contracts can pose dangers if they are not based on pre-existing precise information concerning the consequences of planned actions. The EU-funded RelImprecision project’s goal is a first-of-kind theoretical research on the subject of imprecision (ambiguity) during the initial phase of relational contracting. The project will analyse interactions and possible hazards from imprecise perceptions and formulate several new questions concerning uncertainty in different types of agreements, rules in politics or better modelling of relational motivations.

Objective

This project aims to provide the first analysis of relational contracting when the parties do not (initially) have precise information about the various courses of actions, and experiment them through the relationship. Examples include innovative activeties such as book publishing, research and development, technology adoption in developing countries, and drafting rules and laws in bureaucratic setting.
We introduce in relational contracts framework imprecision about the prospects of actions. Imprecision is formulated as ‘ambiguity’ by building on recent developments in decision theoretic literature. The aim in this project is to explore how the interaction of imprecise perceptions about the consequences of actions and moral hazard introduce new conceptual and analytical issues and how such an interaction plays a role in shaping dynamic relational incentives.
An understanding of these questions is relevant not only for motivating research and development, but also for diverse applications including technology adoption in developing countries, book publishing, as well as drafting new policies and rules of law. In publishing an author will typically have some imprecise information about the new project as previous experience is only partly relevant for new venture, and possibly better information in writing the book than the publisher. Technology adoption in developing countries is similarly dynamic process of experimentation and learning via relationship. Local entrepreneurs have better yet imprecise ideas about new technologies and new practices than development agencies. In policy making and drafting new rules of laws, uncertainty about various acts can shape the optimal degree of delegation implied by the moral hazard between politicians and between bureaucrats so that evidence-based policy-making can be achieved in a healthy democracy.

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Topic(s)

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MSCA-IF - Marie Skłodowska-Curie Individual Fellowships (IF)

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Call for proposal

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(opens in new window) H2020-MSCA-IF-2019

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Coordinator

UNIVERSIDAD CARLOS III DE MADRID
Net EU contribution

Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.

€ 163 099,20
Address
CALLE MADRID 126
28903 Getafe (Madrid)
Spain

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Region
Comunidad de Madrid Comunidad de Madrid Madrid
Activity type
Higher or Secondary Education Establishments
Links
Total cost

The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.

€ 163 099,20

Partners (1)

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