I present a model of two-party contracts that allows for incomplete specification of future states and actions. I examine various damage measures under the assumption that courts protect only reasonable reliance expenditures so that parties make efficient reliance choices. The expectations...

Most analyses of parallel markets in centrally planned systems focus on queue-rationing as the mechanism whereby state-sector goods become available for second economy resale. This article takes into account employee diversion of goods as a second channel through which merchandise can move to...

Most analyses of parallel markets in centrally-planned systems focus on queue-rationing as the mechanism whereby state-sector goods become available for second economy resale. This article takes into account employee diversion of goods as a second channel through which merchandise can move to...

Sunk costs and uncertainty characterize many public policy changes, as well as private investments. The Dixit-Pindyck theory of investment under uncertainty can then be applied to policy reforms, generating a positive option value to delaying a policy reform. The potential to adjust enforcement...

This paper examines how issues ranging from inflation to monopolization in the former Soviet Union are occasionally misdiagnosed, leading to sub-optimal prescriptions for reform. The misdiagnosis occurs because the pre-reform state of the Russian economy is often taken at face value as a...