We find an economic rationale for the common sense answer to the question in our title - courts should not always enforce what the contracting parties write. We describe and analyse a contractual environment that allows a role for an active court. An active court can improve on the outcome that...

The paper is concerned with time-consistency problems caused by monetary policy in an open economy. The temptation to generate surprise inflation is shown to depend positively on the amounts of nominal debt issued by the government or issued by individuals. Private debt matters, because...

Savage (1954) provided axioms on preferences over acts that were equivalent to the existence of an expected utility representation. We show that there is a continuum of other expected utility" representations in which for any act, the probability distribution over states depends on the...