Since the early seventies, the development of the theoretical literature on contracts has been nothing short of explosive. The study of more and more sophisticated abstract models has gone hand in hand with the use of the tools of the theory to better understand many ...elds of economics, such as industrial organization, labor economics, taxation, insurance markets or the economics of banking. ...

Asymmetric awareness of the contracting parties regarding the uncertainty surrounding them is proposed as a reason for incompleteness in contractual forms. An insurance problem is studied between a risk neutral insurer, who has superior awareness regarding the nature of the uncertainty, and a risk averse insuree, who cannot foresee all the relevant contingencies. The insurer can mention in a co...

the theory of efficient breach states that it is socially useful to breach a contract whenever the breach would leave no party worse off, while leaving at least one party better off. in other words, economic analyses of breach are mainly concerned with situations in which breach is pareto-superior, rather than just overall profit-maximizing. in contrast with moral theories that hold that breach...