Contracts adopted with later renegotiation in mind may take simple forms. In a principal-agent model, if renegotiation … may occur after the agent chooses efforet, the principal protects against unfavorable renegotiation by "selling the … contract must be a sales contract if the principal's renegotiation position will be inherently inferior in the sense that (a …

Contracts adopted with later renegotiation in mind may take simple forms. In a principal-agent model, if renegotiation … may occur after the agent chooses efforet, the principal protects against unfavorable renegotiation by "selling the … contract must be a sales contract if the principal's renegotiation position will be inherently inferior in the sense that (a …

renegotiating their contract. The renegotiation occurs after the agent chooses his unobservable effort, but before its consequences … to renegotiation. A sales contract transfers the random return wholly to the agent, thereby relieving the principal of … this sense; renegotiation does not reduce welfare. When the agent can finely control the probabilities of observable …

effort. These contracts are optimal if the entrepreneur has the bargaining power in renegotiation. If the investor has the …