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|
|Publication status:||Published in American Economic Review, vol. 99, n°1, mars 2009, p. 265-294.|
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- Xavier Gabaix & David Laibson, 2006.
"Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,"
The Quarterly Journal of Economics,
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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.
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LSE Research Online Documents on Economics
19350, London School of Economics and Political Science, LSE Library.
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- Allen, Franklin & Gale, Douglas, 1992.
"Measurement Distortion and Missing Contingencies in Optimal Contracts,"
Springer;Society for the Advancement of Economic Theory (SAET), 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.
- Oliver Hart & John Moore, 2008. "Contracts as Reference Points," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 1-48.
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