In this short paper, we show how hard evidence can be incorporated into the mechanism-design framework. We model the parties' inalienable decisions (evidence production) as distinct from an arbitrarily-designed message form. A mechanism specifies the message form and how the public decision is a...

I study a model of a long-term partnership with two-sided incomplete information. The partners jointly determine the stakes of their relationahip and individually decide whether to cooperate with or betray each other over time. I characterize the extremal -- interim incentive efficient --...

This paper analyzes the role of third party intermediaries, such as courts and arbitrators, in contract enforcement. In our model, intermediaries compel contracted transfers and resolve disputes when requested to do so by the contracting agents. When the verifiability of information is limited,...

Motivated by a characteristic way in which firms in developed countries make their decisions regarding cooperation with potential partners from less developed countries, we design a simple model of a DC firm's search for an LDC partner/supplier and the subsequent relationship between the two...

This paper explores how the opportunity to recontract affects investment and trade in contractual relationships when it is assumed that renegotiation is costly. In this world, recontracting retains much of the benefit that has been ascribed to it, including the realization of any surplus that is...

This paper addresses how hard evidence can be incorporated intomechanismdesign analysis. Two classes of models are compared: (a) ones in which evidentiary decisions are accounted for explicitly, and (b) ones in which the players make abstract declarations of their types. Conditions are provided...

This paper reports the analysis of a general model of contract in multi-period settings with both external and self-enforcement. In the model, players alternately engage in contract negotiation and take individual actions. A notion of contractual equilibrium, which combines a bargaining solution...

This paper presents analysis of contractual settings with complete but unverifiable information and where trade consists of a sequence of verifiable productive actions, between which renegotiation can occur. The main result identifies an equivalent, simplified model that can be used to calculate...

This paper evaluates a class of endogenous job destruction models based on how well they explain the observed experiences of displaced workers. We show that pure reallocation models in which relationship-specific productivity drifts downward over time are difficult to reconcile with the evidence...

This paper presents a theory of dynamic trade agreements in which external institutions, such as the WTO, play a central role in supporting credible enforcement. In our model, countries engage in ongoing negotiations, and, as a consequence, cooperative agreements become unsustainable in the...