Contract Duration and Investment Incentives: Evidence from Land Tenancy Agreements
利用1870-1880年意大利锡拉库萨地区的土地租赁数据，分析合同期限如何与补偿方案共同提供投资激励，对理解不完全契约和农业制度有参考价值。
This paper analyzes the empirical determinants of contract length, a key and yet neglected dimension of contractual structure. I estimate contract length and contract type jointly using original data on tenancy agreements signed between 1870 and 1880 in the district of Siracusa, Italy. The findings indicate that the choice of contract length is driven by the need to provide incentives for nonobservable investment, taking into account transaction costs and imperfections in the credit markets that make incentive provision costly. The results also illustrate that because both length and the compensation scheme are used to provide incentives within the same contract, joint analysis is important for a correct interpretation of the evidence.