This paper analyzes bilateral contracting in an environment with contractual incompleteness and asymmetric information. One party (the seller) makes an unverifiable quality choice and the other party (the buyer) has private information about its valuation. A simple deterministic exit option...

The framework of incentive compatible finite direct coordination mechanisms in the sense of Myerson (1982) [5] is isomorphic to a framework of incentive compatible stochastic mediated contracts in the sense of Rahman and Obara (2010) [11] and Rahman (2009) [10]. The equivalence follows because...