effect of renegotiation costs on initial contract terms. TD9599 materially reduced the tax burden of renegotiating U … setting, we examine the implications of incomplete contracting theory for debt contract design. Consistent with incomplete …

contractible. If the firm can make a take-it-or leave-it offer, the optimal contract is also state-dependent but always suboptimal … leading to agency costs due inequity aversion. If the parties bargain over the optimal contract, the optimal division of … surplus is more equitable compared to the case with a purely selfish worker. Moreover, the optimal contract with bargaining …