We relate the design of contract law to the process of development. In this paper, contract law defines which private … levels of effort and trading among agents. The solution to this problem requires a social contract which meets two conditions …: (i) an economywide delegate (judge) responsible for the enforcement of the social contract and (ii) a set of non …

of enforceability that inhibits an agent's ability to renege on the contract and a level of auditing that inhibits his … ability to conceal income. The dynamics of the optimal contract imply an endogenous lower bound on the lifetime utility and … consumption of an agent, strictly positive auditing at all points in the contract and positive enforcement only when the agent …

constraints ensuring that trading partners do not breach contracts unduly. Whether a long-term contract is enforceable does not … optimal contract would remain stationary, non-stationarity might arise under asymmetric information. Enforcement constraints … at high prices at the beginning of the relationship before breaching the contract later on. Yet, such take …

for contract enforcement resulting in opportunistic behavior from private investors. Under a "gray information" regime …