Agreeing now to agree later
Subtitle: contracts that rule out but do not rule in
By: Oliver Hart, John Moore.
Contributors: Moore, John.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10397; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10397.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Contracts.
Description: "We view a contract as a list of outcomes.  Ex ante, the parties commit not to consider outcomes not on the list, i.e., these are ruled out'.  Ex post, they freely bargain over outcomes on the list, i.e., the contract specifies no mechanism to structure their choice; in this sense outcomes on the list are not ruled in'.  A loose' contract (long list) maximizes flexibility but may interfere with ex ante investment incentives.  When these incentives are important enough, the parties may write a tight' contract (short list), even though this leads to ex post inefficiency"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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