This chapter describes the application of contract-based design in Simulink to the development of a digital hydraulic controller. A semi-formal approach to the development is used, where contracts are used to aid the structuring of the system and for creating interface specifications for components that can later be used for testing. An analysis of the influence of the contracts on the developm...

We provide a general mechanism for obtaining uniform information from pointwise data. A sample result is that if a diffeomorphism of a compact Riemannian manifold has pointwise expanding and contracting continuous invariant cone families, then the diffeomorphism is an Anosov diffeomorphism, i.e., the entire manifold is uniformly hyperbolic.

This paper shows how the fear of signaling distrust can endogenously lead to incomplete contractual agreements. According to standard results in contract theory an optimal incentive contract should be conditional on all verifiable information containing statistical information about an agent’s action or type. Most real world contracts, however, condition only on few contingencies and often no e...

Design by contract approach prescribes that developer should define formal and verifiable interface specifications for software components and makes it possible to automate process of software testing. We propose to adapt this approach for Extended Finite State Machines (EFSMs), which are often used in model-based development and for modeling VHDL specifications. This paper proposes an approach...

We analyze an optimistic contract signing protocol of Asokan, Shoup, and Waidner as a case study in the applicability of formal methods to verification of fair exchange protocols. After discussing the challenges involved in formalizing fairness, we use Mur , a finitestate analysis tool, to discover a weakness in the protocol that enables a malicious participant to produce inconsistent versions ...

We present a formal treatment of contracting in the face of ambiguity. The central idea is that boundedly rational individuals will not always interpret the same situation in the same way. More speci cally, even with well de ned contracts, the precise actions to be taken by each party to the contract might be disputable. Taking this potential for dispute into account, we analyze the e ects of a...

The empty creditor problem arises when a debtholder has obtained insurance against default but otherwise retains control rights in and outside bankruptcy. We analyze this problem from an ex ante and ex post perspective in a formal model of debt with limited commitment, by comparing contracting outcomes with and without insurance through credit default swaps (CDS). We show that CDS, and the empt...

Vesting of equity payments to an entrepreneur, which is a form of time-contingent compensation, is very common in venture capital contracts. Empirical research suggests that vesting is used to help overcome asymmetric information and agency problems. We show in a theoretical model that vesting equity to an entrepreneur over a long period of time acts as a screening device against a bad entrepre...

In a finitely repeated principal agent relationship with adverse selection I study (exogenous) interim information that is revealed during a long term relationship. Interim information mitigates adverse selection. Verifiability, measured by the cost of signal manipulation, and the signal’s informativeness determine the use and effectiveness of interim information: Less precise and more manipula...

This paper analyzes the problem of optimal job design when there is only one contractible and imperfect performance measure for all tasks whose contribution to firm value is non-verifiable. I find that task splitting is optimal when relational contracts based on firm value are not feasible. By contrast, if an agent who performs a given set of tasks receives an implicit bonus, the principal alwa...