We find an economic rationale for the common sense answer to the question in our title — courts should not always enforce what the contracting parties write. We describe and analyze a contractual environment that allows a role for an active court. An active court can improve on the outcome that the parties would achieve without it. The institutional role of the court is to maximize the parties’...

An increasing trend of economic agents is to form productive associations such as networks, platforms, and other hybrids. Subsets of these agents contract with each other to further their network project and these contracts can create benefits for, or impose costs on, agentswho are not contract parties. Contract law regulates third party claims against contract parties with the third-party bene...

The public sector in developing countries is increasingly contracting with the non-state sector to improve access, efficiency and quality of health services. We conducted a multicountry study to assess the range of health services contracted out, the process of contracting and its influencing factors in ten countries of the Eastern Mediterranean Region: Afghanistan, Bahrain, Egypt, Islamic Repu...

This paper contributes to the broad literature on public services contracting in two ways. First, we provide an empirical analysis of contracting decisions in the provision of welfare-to-work (WTW) services. We estimate both the WTW-contracting decisions of Dutch municipalities and their impact on the performance, measured as the fraction of Social Assistance (SA) recipients. Second, we explici...

Civil wars and con‡ict can be understood from an economic point of view only if there is incomplete contracting. I examine such settings and …rst discuss sources of incomplete contracting, from geography and ethnic and social distance to external interventions due to geopolitics or the presence of rents. Yet, since war is destructive, the contending parties might normally be expected to settle ...

Contracts play an important role in the every day life of many individuals. Contracts are often negotiated and drafted in an unstructured manner. In this paper we propose a more structured model driven approach to contracting. In particular, we focus on developing a risk and trust model for the transaction that is subsequently used to negotiate the contract. We show how rules can be applied to ...

Abstract I demonstrate that transacting parties may expend resources on ex ante contracting, which not be legally enforceable, to help build and maintain their long-term relationships. first introduce three legal concepts, namely scaffolding , managerial provisions formal relational contracts highlight the recent trend towards more detailed contracts. These concepts indicate role of is improve ...

Leveled-commitment contracting is a negotiation protocol in which an agent is allowed to be freed from a contract at the cost of paying a penalty to the other contract party. While there has been some related work on analyzing agents’ strategic behavior in leveledcommitment contracting and applying decommitment contracting in practical resource allocation problems, decommitment penalties are ex...

The first chapter examines the interaction of heterogeneous firms in a competitive market in which firms motivate their workers using relational incentive contracts. In the steady-state rationalexpectations equilibrium, aggregate TFP is fully characterized by a weighted average of firm-specific sustainable effort levels. Relational contracts amplify exogenous productivity heterogeneity and lead...

Of the ways in which agent behaviour can be regulated in a multiagent system, electronic contracting – based on explicit representation of different parties' responsibilities, and the agreement of all parties to them – has significant potential for modern industrial applications. Based on this assumption, the CONTRACT project aims to develop and apply electronic contracting and contract-based m...