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Describability and Agency Problems

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Author Info
Luca Anderlini (St. John's College, Cambridge)
Leonardo Felli (London School of Economics)

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Abstract

This paper suggests a reason, other than asymmetric information, why agency contracts are not explicitly contingent on the agent's performance or actions. Two ingredients are essential to this reason. The first is the written form that contracts are required to take to be enforceable. The second is a form of discontinuity in the parties' preferences and in the technology that transforms actions into a (probabilistic) outcome. We show that under these conditions the chosen contract may not be explicitly contigent on the agent's action although, in principle, such actions are contractible and observable to all parties to the contract, court included.

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Publisher Info
Paper provided by EconWPA in its series Game Theory and Information with number 9511001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 32 pages
Date of creation: 15 Nov 1995
Date of revision: 20 Sep 1996
Handle: RePEc:wpa:wuwpga:9511001

Note: Type of Document - LaTeX; prepared on IBM PC ; to print on PostScript 600DPI; pages: 32; figures: included
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Web page: http://129.3.20.41

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Related research
Keywords: Acency Problems; Written Contracts; Incomplete Contracts; Hard-to-describe Actions and Outcomes;

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Find related papers by JEL classification:
C69 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Other
D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Anderlini, L. & Felli, L., 1995. "Endogenous Agency Problems," Papers 200, Cambridge - Risk, Information & Quantity Signals.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Shurojit Chatterji & Dragan Filipovich, 2004. "Ambiguous Contracting: Natural Language and Judicial Interpretation," Econometric Society 2004 North American Winter Meetings 419, Econometric Society. [Downloadable!]
  2. Nabil J Al-Najjar & Luca Anderlini & Leonardo Felli, 2002. "Unforeseen Contingencies," STICERD - Theoretical Economics Paper Series 431, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
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