Anderlini, Luca and Felli, Leonardo (1996) Costly contingent contracts. TE/1996/313. Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science, London, UK.Full text not available from this repository.
We identify and investigate the basic ?hold-up? problem which arises whenever each party to a contingent contract has to pay some ex-ante cost for the contract to become feasible. We then proceed to show that, under plausible circumstances, a ?contractual solution? to this hold-up problem is not available. This is because a contractual solution to the hold-up problem typically entails writing a ?contract over a contract? which generates a fresh set of ex-ante costs, and hence is associated with a new hold-up problem. We conclude the paper investigating two applications of our results to a static and to a dynamic principal-agent model.
|Item Type:||Monograph (Discussion Paper)|
|Additional Information:||© 1996 Luca Anderlini, Leonardo Felli|
|Library of Congress subject classification:||H Social Sciences > HB Economic Theory|
|Sets:||Research centres and groups > Financial Markets Group (FMG)
Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Departments > Economics
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