Contracts may be subject to strategic default, particularly if public enforcement institutions are weak. In a lab experiment, we study behavior in a contract farming game without third-party enforcement but with an external spot market as outside option. Two players, farmer and company, may...

Courts are willing, in commercial contests, to enforce promises even without consideration when enforcement supports a norm of reciprocity -- a norm which recognizes that such promises are seldom totally gratuitous, but are often made in furtherance of reciprocal, long-term, trust-based...