Standard implicit contract theory can explain wage rigidity but not unemployment and pays insufficient attention to the general equilibrium aspects and constraints limiting the set of feasible contracts. Implicit contracts must specify an enforcement mechanism, can only be conditional on...

The authors present new ways of looking at economic organizations andsystems. Individuals' judgments entail errors (they sometimes reject good projects and accept bad projects). The architecture of an economicsystem, specifying how the decision making units are organized togetherwithin a system,...