In most of the contract theory literature, contracting costs are assumed either to be high enough to preclude certain forms of contracting or low enough to permit any contract to be written. Similarly researchers usually treat renegotiation as either costless or prohibitively costly. This...

The standard contract that governs friendly mergers contains material adverse change (MAC) and material adverse effect (MAE) clauses; these clauses permit a buyer to costlessly cancel the deal if such a change or effect occurs. In recent years, the application of the traditional standard-like...

This paper reports experimental tests of three search equilibrium models. These models, which differ only in the search strategies available to the buyers, have qualitatively different predictions. The experimental ou tcomes generally were consistent with the models' predictions. This s uggests...

This article asks whether competition can ameliorate the consequences of cognitive error. Consumers differ cognitively, some being more prone to err (the "naive") than others (the "sophisticated"). Competition among firms is analyzed with a search equilibrium model. Firms offer an exploitative...