Cognition and Incomplete Contracts

Article, Book, Preprint English OPEN
Tirole, Jean;
(2008)
  • 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
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