Contracting on Time

Long-Term Contracting with Time-Inconsistent Agents∗

In many contractual relationships, consumers are allowed to terminate agreements at will. We study how removing commitment power from consumers affects equilibrium contracts and welfare when consumers have self-control problems. We show that removing commitment power is welfare improving when consumers are sufficiently dynamically inconsistent. Controlling for impatience, it is easier to sustai...

On Deep e-Contracting

The use of electronic contracts is emerging as a way to improve the efficiency of contracting processes. Electronic contracts are, however, often used as a direct replacement for traditional paper contracts – which we call shallow e-contracting. Consequently, business processes in general and contracting processes in particular do not change much through the use of electronic contracts. New bus...

Third Thoughts on Contracting Out

L i k e many libertarians, I used to accept without question the idea that contracting out for government services was a good idea. After all, it puts production back into the hands of relatively efficient private producers. However, after reviewing the literature o n contracting out for law enforcement services (Benson 1990, pp. 17999), I had some second thoughts, concluding that while contrac...

Rousseau's "social contract": contracting ahead of its time?

Procurement Contracting with Time Incentives: Theory and Evidence

In public sector procurement, social welfare often depends on the time taken to complete the contract. A leading example is highway construction, where slow completion times inflict a negative externality on commuters. Recently, highway departments have introduced innovative contracting methods that give contractors explicit time incentives. We characterize equilibrium bidding and efficient des...