Foundations of Incomplete Contracts

@inproceedings{Hart1998FoundationsOI,
  title={Foundations of Incomplete Contracts},
  author={Oliver Hart and John. Moore},
  year={1998}
}
In the last few years, a new area has emerged in economic theory, which goes under the heading of 'incomplete contracting'. However, almost since its inception, the theory has been under attack for its lack of rigorous foundations. In this paper we evaluate some of the criticisms that have been made of the theory, in particular, those in Maskin and Tirole (1998a). In doing so, we develop a model that provides a rigorous foundation for the idea that contracts are incomplete. 
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889 Citations
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Methods Citations
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889 Citations

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References

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Incomplete contracts: Where do we stand?
The paper takes stock of the advances and directions for research on the incomplete contracting front. It first illustrates some of the main ideas of the incomplete contract literature through an…
Strategic Contractual Inefficiency and the Optimal Choice of Legal Rules
Two separate groups of academics have brought about a renaissance of sorts in the analysis of incomplete contracts. Law and economics scholars-writing in law reviews-have shown renewed interest in…
Implementation in Environments with Complete Information (Now published as 'Implementation, Contracts and Renegotiation in Environments with Complete Information' in J-J Laffont (ed.), Advances in Economic Theory: Invited Papers to the World Congress of the Econometric Society, vol.I (1992), pp.182-
There are two parts to this paper. Part One introduces the subject of implementation, and provides applications (in particular, to the theory of contracts). This part is written so as to be…
Complexity and Renegotiation: A Foundation for Incomplete Contracts
The paper considers a hold-up model where only one of n future trading opportunities will prove to be efficient, and where ex post renegotiation of the ex ante contract cannot be prevented. As the…
Unforeseen Contingencies and Incomplete Contracts
We scrutinize the conceptual framework commonly used in the incomplete contract literature. This literature usually assumes that contractual incompleteness is due to the transaction costs of…
Cooperative Investments and the Value of Contracting
Recent articles have shown that contracts can support the efficient outcome for bilateral trade even in the face of specific investments and incomplete contracting. These studies typically considered…
Two Remarks on the Property-Rights Literature
We first point out that the recent property-rights literature is based on three assumptions: (1) that contracts are always subject to renegotiation; (2) that the exercise of a property right confers…
The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration
Our theory of costly contracts emphasizes that contractual rights can be of two types: specific rights and residual rights. When it is costly to list all specific rights over assets in the contract,…
Property Rights and the Nature of the Firm
This paper provides a framework for addressing the question of when transactions should be carried out within a firm and when through the market. Following Grossman and Hart, we identify a firm with…
Implementation and Renegotiation
The paper characterises the choice rules that can be implemented when agents are unable to commit themselves not to renegotiate the mechanism.
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