The "lost-volume" problem in contract law poses a problem of contract design. A seller with market power who faces buyers with private valuations for the subject of sale solves the problem with a combination of a required positive down payment and a later transaction price above cost. This...

We study the effect of legal constraints in an environment in which agents face demand shocks they would like to smooth but also have weakness of will: agents' long and short run preferences are misaligned. Some agents are sophisticated--they know they will make inconsistent intertemporal...