Mitigating Contractual Hazards: Unilateral Options and Contract Length

Contract Incompleteness , Contractual Enforcement and Bureaucracies ∗

This paper explains frequently observed coexistence of deficient property rights and heavy bureaucracies. We suggest that there is a specific role for bureaucracies in environments with insure property rights. In such situations, bureaucracies substitute for enforceable contracts. We study irreversible investment in an asset over which property rights are unclear, and model the property rights ...

Contractual Performance, Corrective Justice, and Disgorgement for Breach of Contract

This paper is about the remedy of disgorgement for breach of contract. In it I argue for two conclusions. I first argue that, prima facie at least, disgorgement damages for breach of contract present something of a puzzle. But second, I argue that if we pay close attention to the notion of contractual performance, this puzzle can be resolved in a way that is consistent with principles of correc...

Contract Renegotiation and Options in Agency Problems

This article discusses the ability of an agent and a principal to achieve the first-best outcome when the agent invests in an asset that has greater value if owned by the principal than by the agent. When contracts can be renegotiated, a well-known danger is that the principal can hold up the agent, undermining the agent’s investment incentives. We begin by identifying a countervailing effect: ...

Contract Design: Financial Options and Risk

Introduction Integrated care systems as well as accountable care organisations (ACOs) in the US and similar concepts in other countries are advocated as an effective method of improving the performance of healthcare systems. These systems outline a payment and care delivery model that intends to tie provider reimbursements to predefined quality metrics. By this the total costs of care shall be ...

Assessing and mitigating natural hazards in a very uncertain world