Enforceable Contracts under Generalized Information of the Court
Bernheim and Whinston (1997) (henceforth BW) formalize court's verifiability as a correspondence mapping actually played actions into events (i.e. sets of actions) verified by the court. Their normal-form analysis restricts attention to partitional product correspondences. They define any element in the partition a "complete" enforceable contract. After motivating the discussion of non-partitional and non-product correspondences by means of simple examples, we show that the BW approach may fail to capture all feasible outcomes for product non-partitional correspondences, and that is valid against all partitional non-product ones only if one allows for a joint liability regime. Even in the case of joint liability regimes, the BW approach may be extended only to deal with non-product or non-partitional correspondences. Therefore, a definition of enforceable contract that is independent of the players' payoffs may not capture all feasible outcomes.
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- Brandenburger, Adam & Dekel, Eddie & Geanakoplos, John, 1992.
"Correlated equilibrium with generalized information structures,"
Games and Economic Behavior,
Elsevier, vol. 4(2), pages 182-201, April.
- Geanakoplos & Adam Brandenburger & Eddie Dekel, 1988. "Correlated Equilibrium with Generalized Information Structures," Cowles Foundation Discussion Papers 884R, Cowles Foundation for Research in Economics, Yale University, revised Aug 1989.
- Paul R. Milgrom & John Roberts, 1985.
"Relying on the Information of Interested Parties,"
Cowles Foundation Discussion Papers
749, Cowles Foundation for Research in Economics, Yale University.
- Monderer, Dov & Samet, Dov, 1989. "Approximating common knowledge with common beliefs," Games and Economic Behavior, Elsevier, vol. 1(2), pages 170-190, June.
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