effect of renegotiation costs on initial contract terms. TD9599 materially reduced the tax burden of renegotiating U … setting, we examine the implications of incomplete contracting theory for debt contract design. Consistent with incomplete … contracting theory, we find that, as renegotiation costs fall, the maturity of debt contracts lengthens, the likelihood of …

" message. Our monotonicity theorem establishes that the set of implementable state-contingent payoffs increases with the costs …

threatening to take an inefficient action which hurts both of them. Without this assumption, a simple buyer option contract can …

-forcing dual-option contract, the party without the trade action is made residual claimant with regard to the investment action … not attainable but the dual-option contract is still optimal in a wide class of settings. More generally, the paper shows …

In simple textbook treatment of bilateral exchange traders end up on the contract curve such that the trading surplus …