Contract Modification: An Economic Analysis of the Hold-up Game

@article{Graham1989ContractMA,
  title={Contract Modification: An Economic Analysis of the Hold-up Game},
  author={Daniel A. Graham and Ellen Rust Peirce},
  journal={Law and contemporary problems},
  year={1989},
  volume={52},
  pages={9-32}
}
The very foundation of our contract law is based upon the premise of the bilateral voluntary exchange. In a market economy, such exchanges involve a process in which the parties bargain voluntarily, each striving to maximize his own economic advantage on terms that are acceptable to the other party.' The presumption is that this process yields a "Pareto improvement" in which at least one party is better off and neither party is worse off than would have been the case without the exchange.2 The… 

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