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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- Xavier Gabaix & David Laibson, 2005.
"Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,"
NBER Working Papers
11755, National Bureau of Economic Research, Inc.
- Xavier Gabaix & David Laibson, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 505-540, May.
- Laibson, David I. & Gabaix, Xavier, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," Scholarly Articles 4554333, Harvard University Department of Economics.
- 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.
- Allen, Franklin & Gale, Douglas, 1992. "Measurement Distortion and Missing Contingencies in Optimal Contracts," Economic Theory, Springer, vol. 2(1), pages 1-26, January.
- Salvatore Piccolo & David Martimort, 2006. "The Strategic Value of Incomplete Contracting in a Competing Hierarchies Environment," CSEF Working Papers 160, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 08 Dec 2006.
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