(with Bhaskar Dutta and Kunal Sengupta), in P. Bardhan (ed.), The Economic Theory of Agrarian Institutions, Clarendon Press, Oxford (1989).
Summary. We study repeated principal-agent problems in which the agent can be evicted and replaced by another identical agent. Thus current output, which is perfectly observed, can be used for incentives as well as efficiency wages. We describe conditions under which eviction threats will be used in equilibrium, in addition to output-based incentives.