incomplete contract. It is shown that the efficiency of these solutions is very sensitive to the characteristics of the good or …

that permit maximum discretion yield trading patterns that are closer what is observed under a perfectly complete contract …. Our results are consistent with the theory of strategic ambiguity of Bernheim and Whinston (1998) and can be rationalized …

PPL damages vis-à-vis expected damages under existing contract law. This study clarifies the conditions under which PPLD …

a finitely-repeated labor market with unenforceable worker effort. Theory predicts, and our data confirms, that (1 …

consequences. A principal-agent experiment is studied in which prior to contract choice principals are informed about past actions … principals agents exert nearly 50% higher efforts under a fixed wage contract when an informed principal had chosen this contract …

talented workers leads to an escalating reliance on performance pay and other high-powered incentives, thereby shifting effort … distorts incentives downward in order to extract rents. More generally, as declining market frictions lead employers to compete …, while inequality tends to rise monotonically. Bonus caps and income taxes can help restore balance in agents' incentives and …

employment contract. We show that not imposing such an agreement can be beneficial for the principal as the possibility to leave … the firm generates implicit incentives for the agent. The principal prefers to impose such a clause if and only if the … value created is sufficiently small relative to the agent’s outside option. If the principal can use an option contract for …

mechanism should – in theory – provide incentives for truth-telling, many buyers in fact believe that they can increase their …