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Randomization in coalition contracts

  • Patrick Schmitz

    ()

This article analyzes a much debated clause in the coalition contract between SPD and FDP in Rheinland-Pfalz. Two parties write a contract, based on which decisions under incomplete information have to be made at a later point in time. It is shown that a complex complete contract can achieve the first best outcome. However, a simple incomplete contract can implement the first best outcome only if use of seemingly inefficient randomization is made. Copyright Kluwer Academic Publishers 1998

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File URL: http://hdl.handle.net/10.1023/A:1004940703549
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Article provided by Springer in its journal Public Choice.

Volume (Year): 94 (1998)
Issue (Month): 3 (March)
Pages: 341-353

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Handle: RePEc:kap:pubcho:v:94:y:1998:i:3:p:341-353
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