The decision making of judges is prone to error and misapprehension. Consequently, the prevailing literature ties the economic function of courts to dispute resolution and minimization of rule making costs. In contrast to previous research, this analysis applies a contract theoretic perspective...

This paper argues that contracts induced by means of bribery should be valid. Nullity and voidability decrease the incentive for voluntary disclosure, assist corrupt actors with enforcing their bribe agreements and provide leeway for abuse. Thus, they run counter to effective anti-corruption. It...

This paper compares the incentives of a party to acquire information prior to negotiating contractual terms with a second party. Two legal regimes are compared: disclosing information before negotiations start is mandatory or it remains voluntary. By assumption, information can only truthfully...

I consider a setting of complete but unverifiable information in which two agents enter a contractual relationship to induce mutually beneficial investments. As my main result, I establish that the famous irrelevance of contracting paradigm, that arises due to the detrimental effect of...

The aim of the paper, based on empirical research in Brazil, is to investigate how supply chains have evolved over time, what factors have driven this evolution and also how a specific set of contractual practices along these chains is linked to access to international markets. The two selected...

We develop a theoretical model to identify and compare partial and equilibrium effects of uncertainty and the magnitude of fines on punishment and deterrence. Partial effects are effects on potential violators' and punishers' decisions when the other side's behavior is exogenously given....

In two experiments, we examine the effects of employer reputation in an online labor market (Amazon Mechanical Turk) in which employers may decline to pay workers while keeping their work product. First, in an audit study of employers by a blinded worker, we find that working only for good...

This paper develops a game-theoretic model of a contract between a creditor and a debtor where equilibrium depends on the damage rule chosen for breach-of-contract situations, the use of impossibility-of-performance excuses and the level of legal contract enforceability. We find that, under...

Transaction costs are a major reason why international trade flows are much smaller than traditional trade theory would suggest. Trust between trading partners lowers transaction costs and may therefore enhance trade. The empirical analysis of this paper shows that more trust leads to more trade...

Theory predicts that default breach remedies are immaterial whenever contracting costs are negligible. Some experimental studies, however, suggest that in practice default rules do matter, as they may affect parties' preferences over contract terms. This paper presents results from an experiment...