We describe and analyze a contractual environment that allows a role for an active court. The model we analyze is the same as in Anderlini, Felli, and Postlewaite (2006). An active court can improve on the outcome that the parties would achieve without it. The institutional role of the court is...

We propose a theory explaining the shape of contracts between local governments and the contractors they hire to run public facilities on their behalf. Governments are privately informed over the quality of the facility and risk-averse while risk-neutral contractors are subject to a moral hazard...