Definition of Implicit Contract / Implicit Contracts:
An implicit contract is a non-contractual agreement that corresponds to a Nash equilibrium to the
repeated bilateral trading game other than the sequence of Nash equilibria to
the one-shot trading game.
In the labor market -- an implicit contract is formally represented by a
series of games in which the firm pays a salary and the employee works
effectively because they expect to play the game again (continue the
agreement) if it goes well, not because they have an explicit, enforceable
contract.
(Econterms)
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