Cognition and Incomplete Contracts

Thinking about contingencies, designing covenants, and seeing through their implications is costly. Parties to a contract accordingly use heuristics and leave it incomplete. The paper develops a model of limited cognition and examines its consequences for contractual design. (JEL D23, D82, D86, L22)

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Year of publication:	2009
Authors:	Tirole, Jean
Published in:	American Economic Review. - American Economic Association - AEA. - Vol. 99.2009, 1, p. 265-94
Publisher:	American Economic Association - AEA

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Extent:	application/pdf
Type of publication:	Article
Notes:	DOI: 10.1257/aer.99.1.265
Classification:	D23 - Organizational Behavior; Transaction Costs; Property Rights ; D82 - Asymmetric and Private Information ; D86 - Economics of Contract: Theory ; L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10004999833