IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-08d80017.html
   My bibliography  Save this article

A monotone comparative static result on contract incompleteness

Author

Listed:
  • Yasunori Watanabe

    (Manufacturing Management Research Center, The University of Tokyo)

Abstract

The purpose of this paper is to generalize the incomplete contract model of Bajari and Tadelis (2001) into a continuous model, and to derive the condition under which the monotone comparative statics (MCS) methods can be applied. I will show that a type of single-crossing condition on the isoprobability curves of uncertainty is necessary and suffcient for the availability of the MCS methods when a player has a supermodular ex post utility function. In this case, the greater the magnitude of uncertainty, the less his optimal contract allows the project to proceed smoothly.

Suggested Citation

  • Yasunori Watanabe, 2008. "A monotone comparative static result on contract incompleteness," Economics Bulletin, AccessEcon, vol. 4(16), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-08d80017
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2008/Volume4/EB-08D80017A.pdf
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-08d80017. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.