New Projects Sharing Ratios under Musharakah Financing: A Repeated Game Theoretical Approach Using an Output versus a Proposed Effort Based Contract | Science Publications

American Journal of Applied Sciences

Mohamed Tkiouat¹  Adil Elfakir¹ 

关键词: Musharakah;    Effort Based Contracts;    Output Based Contracts;    Sharing Ratio;    Moral Hazard;    Adverse Selection;   

DOI  :  10.3844/ajassp.2015.654.662

学科分类：自然科学（综合）

来源: Science Publications

【 摘 要 】

In this research, we provide a game theoretical approach ofnew projects financed under musharakah contracts using two types of contracts. Thefirst type is effort based. It compensates the agent for the effort providedregardless of market conditions. The other type of contract is output basedwhere the agent compensation is based solely on output realized. Our intuitionis, on one hand, that an agent acceptance of an effort based contract signals ahigher ability and therefore merits a higher compensation. On the other hand,an agent opting for an output based signals a reliance on market condition andtherefore a lower effort ability meriting lower compensation. We found evidencethat an effort based contract offer better compensation to the agent in theform of lower sharing ratio to the financier. This result has two importantIslamic implications. First it emphasizes the sentiment of altruism which thefinancier shows by taking a smaller sharing ratio. Second it emphasizes thesentiment of positive reciprocity which the agent exhibits by providing higheffort. Another finding is that an effort based contract offers more span ofnegotiation than an output based contract. This is an important Islamic conceptas the agent has fewer restrictions in terms of negotiations. This paper tackletwo problems of information assymetries. Namely it tackles adverse selectionand moral hazards.

【 授权许可】

Unknown