The Relationship between Formal and Relational Contracts in Commercial Banks Executive Multitask Incentive

In multitask incentive, in addition to encouraging agent to be accordant with the principal's wishes, the contract allocate the attention of agent. The incentive of commercial banks executive is a typical multitask incentive. Formal and relational contract are adopted simultaneously. Research on the relationship of them could meet the above requirement. According to the incentive theory, formal and relational contract are complementary in verification of tasks, risk aversion, incentive terms and other aspects. The establishment of formal and relational incentive contracts interaction model further validates the complementary relationship. Based on the static model, the repeated game model is established. The model shows only two contracts exist at the same time, the optimal contract achieved. A self enforcing condition of the model is obtained. Besides, a general multitask dynamical game model is extended for the future multitask development.