Enforceable Contracts under Generalized Information of the Court
AbstractBernheim and Whinston (1997) (henceforth BW) formalize court's verifiability as a correspondence mapping actually played actions into events (i.e. sets of actions) verified by the court. Their normal-form analysis restricts attention to partitional product correspondences. They define any element in the partition a "complete" enforceable contract. After motivating the discussion of non-partitional and non-product correspondences by means of simple examples, we show that the BW approach may fail to capture all feasible outcomes for product non-partitional correspondences, and that is valid against all partitional non-product ones only if one allows for a joint liability regime. Even in the case of joint liability regimes, the BW approach may be extended only to deal with non-product or non-partitional correspondences. Therefore, a definition of enforceable contract that is independent of the players' payoffs may not capture all feasible outcomes.
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Bibliographic InfoPaper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1268.
Date of creation: Aug 1999
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Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014
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"Correlated equilibrium with generalized information structures,"
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