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In a repeated game version of the bonus contract relationship, B for high performance, the performance of the agent yields an estimate of the future
In a repeated game version of the bonus contract relationship, B for high performance, the performance of the agent yields an estimate of the future stream of value from maintaining the relationship, PV. We expect that: The firm will pay the bonus if PV > B Reneging on the contract means no worker will trust the company and the expected value of the relationship will be very low or zero The value of PV is dependent on the expected interest or discount rate All of the above
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