Contracting in the Shadow of the Law ( Job Market Paper )

  title={Contracting in the Shadow of the Law ( Job Market Paper )},
  author={Nicola Gennaioli},
  • Nicola Gennaioli
  • Published 2003
I construct a theoretical framework to study how the degree of judicial independence affects both the form and the efficiency of private contracts. I show that ”common law” systems of judicial autonomy foster the use of contingent contracts while codified “civil law” systems induce the parties to adopt rigid contracts, protecting them against worst-case scenarios. The benefit of independence is that it leads judges to use more information, its cost is that they tend to be too interventionist… CONTINUE READING

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