Cognition and Incomplete Contracts
Thinking about contingencies, designing covenants, and seeing through their implications is costly. Parties to a contract accordingly use heuristics and leave it incomplete. The paper develops a model of limited cognition and examines its consequences for contractual design. (JEL D23, D82, D86, L22)
(This abstract was borrowed from another version of this item.)
|Date of creation:||Feb 2008|
|Date of revision:|
|Publication status:||Published in American Economic Review, vol.�99, n°1, mars 2009, p.�265-294.|
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- Allen, Franklin & Gale, Douglas, 1992.
"Measurement Distortion and Missing Contingencies in Optimal Contracts,"
Springer, vol. 2(1), pages 1-26, January.
- Allen, F. & Gale, D., 1990. "Measurement Distortion And Missing Contingencies In Optimal Contracts," Weiss Center Working Papers 26-90, Wharton School - Weiss Center for International Financial Research.
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