@article{6baa18aea5074109a9040630096523db,
title = "Relational adaptation under reel authority",
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.",
keywords = "Adaptation, Relational contracts, Renegotiation",
author = "Daniel Barron and Robert Gibbons and Ricard Gil and Murphy, {Kevin J.}",
note = "Funding Information: 3.1. Relational Adaptation Supported by Formal Contracting Funding Information: The authors are grateful for discussions and comments from Charles Angelucci, William Fuchs, Francine Lafontaine, Jonathan Levin, Rocco Macchiavello, Julie Mortimer, Ali Palida, Michael Powell, Pablo Spiller, Tommy Wang, and Luigi Zingales; seminars at the American Economic Association, the Berkeley–Paris Workshop on Organizational Economics, the Centre for Economic Policy Research{\textquoteright}s Incentives, Management, and Organizations Workshop, Finance, Organizations, and Markets, Guanghua School of Management at Peking University, the International Society for New Institutional Economics, Kyoto University (Contract Theory Workshop), the Massachusetts Institute of Technology (MIT) Organizational Economics Lunch, the University of Southern California (USC) Marshall Brown-Bag Seminar, Rice University, Shanghai Jiao Tong University, Institut d{\textquoteright}Administration des Entreprises Sorbonne Paris I, the University of Hong Kong, the University of International Business and Economics in Beijing, the Utah Winter Business Economics Conference, and the Workshop on Relational Contracts (Madrid); and financial support from MIT Sloan{\textquoteright}s Program on Innovation in Markets and Organizations and the USC Marshall School. The usual disclaimer applies. Funding Information: The authors received funding from MIT Sloan program on Innovation in Markets and Organizations; University of Southern California Marshall School of Business. Funding Information: History: Accepted by Joshua Gans, business strategy. Funding: The authors received funding from MIT Sloan program on Innovation in Markets and Or-ganizations; University of Southern California Marshall School of Business. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2019.3292. Publisher Copyright: Copyright: {\textcopyright} 2019 INFORMS",
year = "2020",
month = may,
doi = "10.1287/mnsc.2019.3292",
language = "English (US)",
volume = "66",
pages = "1868--1889",
journal = "Management Science",
issn = "0025-1909",
publisher = "INFORMS Inst.for Operations Res.and the Management Sciences",
number = "5",
}