Kim, Jeong-Yoo; Rhee, Kyoungwon - In: Journal of Institutional and Theoretical Economics (JITE) 162 (2006) 4, pp. 543-556
We examine the effect of various damage measures on the buyer's information acquisition efforts when the buyer can learn a signal about the production cost after a contract. We find that contrary to standard results, liquidated damages induce neither efficient performance nor efficient reliance,...