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On Watson's Non-Forcing Contracts and Renegotiation

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  • Roberto Serrano

    ()
    (Brown University)

Abstract

Watson (2007) proposes non-forcing contracts as a way to show the limitations of the mechanism design program with ex-post renegotia- tion (Maskin and Moore (1999)). If one takes a partial implementation approach, as Watson does, we show that non-forcing contracts do not con- stitute an intermediate paradigm between implementation with no renego- tiation and with ex-post renegotiation. Moreover, taking a full implemen- tation approach, non-forcing contracts fail if and only if one goes outside of the constraints identified by Maskin and Moore, because of the appearance of undesirable equilibria.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 29 (2009)
Issue (Month): 3 ()
Pages: 2350-2360

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Handle: RePEc:ebl:ecbull:eb-09-00450

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Keywords: contracts; renegotiation; mechanism design;

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Cited by:
  1. Serrano, Roberto & Vohra, Rajiv, 2010. "Multiplicity of mixed equilibria in mechanisms: A unified approach to exact and approximate implementation," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 775-785, September.
  2. Watson, Joel, 2002. "Contract, Mechanism Design, and Technological Detail," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt18x0r2nn, Department of Economics, UC San Diego.
  3. Yusuke Kamishiro & Roberto Serrano, 2009. "Equilibrium Blocking in Large Quasilinear Economies," Working Papers 2009-12, Brown University, Department of Economics.

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