Cognition and Incomplete Contracts

Article, Book, Preprint OPEN
Jean Tirole (2009)
  • Publisher: IDEI Working Paper
  • Journal: American Economic Review, volume 99, issue 1 March, pages 265-94
  • Related identifiers: doi: 10.1257/aer.99.1.265
  • Subject: B- ECONOMIE ET FINANCE
    • jel: jel:D86 | jel:D23 | jel:L22 | jel:D82

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 de... View more
  • References (2)

    Aghion, Philippe and Patrick Bolton. 1987. “Contracts as a Barrier to Entry,” American Economic Review, 77(3): 388-401.

    Maskin, Eric S., and Jean Tirole. 1999b. “Unforeseen Contingencies and Incomplete Contracts.” Review of Economic Studies, 66(1): 83-114.

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