Third-party Contract Enforcement: Evidence from a Framed Field Experiment in a Peruvian Garment Cluster

Abstract: Despite the theoretical importance institutional economics places on third-party contract enforcement, most of which has empirical grounding in case studies or laboratory experiments, more detailed models of contract enforcement have yet to be rigorously tested with real-world subjects and/or in more real-world settings. This study tests a third-party contract enforcement mechanism – assessing the individual influence of information and punishment components – via a framed field experiment with members of a Peruvian garment cluster. Results will inform the design of a subsequent randomized-controlled trial (RCT) evaluation of the third-party contract enforcement mechanism’s impact in a real-world online platform, thus offering a unique combination of field experimental evidence on the influence of contract enforcement institutions.