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, March 2009, p. 265-294.|
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Harvard Institute of Economic Research Working Papers
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"Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,"
NBER Working Papers
11755, National Bureau of Economic Research, Inc.
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- Laibson, David I. & Gabaix, Xavier, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," Scholarly Articles 4554333, Harvard University Department of Economics.
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"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;Society for the Advancement of Economic Theory (SAET), vol. 2(1), pages 1-26, January.
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