Opening Schrödinger Black Box between Flexible Contracts and Behavior:——A Competitive Mediation Model Based on Principal-Agent and Contracts as Reference Points

Abstract

Abstract: The Lakatos' criticism of principal-agent analysis paradigm reveals that there exists a “Schrödinger black box” between flexible contracts and agents' behavior. The study loosens the auxiliary assumption of Coase-style renegotiation, and integrates the analytical paradigm of principal-agent and contract reference point to build a competitive mediation model with price adjustments conflict as the mediator to explore the two opposing mechanism of how flexible contracts affecting agents' behavior. Empirical test results based on 213 valid samples of construction project transactions show that first, controlling the price adjustments conflict, flexible contracts could improve agents' behavior; second, the price adjustments conflict plays a negative mediating role between flexible contracts and agents' behavior and; third, the flexible contracts is the necessary, but not sufficient, condition for improvement of agents' behavior. The findings of this study provide theoretical guidance and management implication for using the flexible contracts scientifically in practice.

Key words: flexible contracts, agents' behavior, price adjustments conflict, principal-agent, contract reference point

Chen Menglong, Yin Yilin, Peng Feng. Opening Schrödinger Black Box between Flexible Contracts and Behavior:——A Competitive Mediation Model Based on Principal-Agent and Contracts as Reference Points[J]. Management Review, 2021, 33(2): 263-277.

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