This paper studies opportunistic behaviour in a model of decentralized economic exchange and inadequate institutional framework of formal contract enforcement. It is shown that (i) when the number of cheating traders is sufficiently large, inadequate institutions (e.g. due to insufficient legal provisions and/or ineffective enforcement of existing laws) result in a loss of decentralized trading...

We consider an exchange economy in which agents possess private information at the time of engaging in state contingent contracts. While communication of private information is permitted, the true information state is not verifiable. The enforcement of contracts is, therefore, limited by incentive compatibility constraints. We formalize a notion of the core for such an economy. Our analysis can...

Private information and limited enforcement are two frictions that impede the provision of first best insurance against income risk. To mitigate these frictions, societies make costly investments into technologies such as auditing and enforcement systems. The implicit assumption throughout most of the literature is that either or both of these technologies is either costless or infinitely costl...

Recent trends in Aspect-oriented Design (AOD) have emphasized interface-based modularity constructs that support noninvasive advising of components by aspects in a robust and flexible way. We show how the AspectJ-based tool Contract4J supports Design by Contract in Java using two different forms of a design patternlike protocol, one based on Java 5 annotations and the other based on a JavaBeans...

This paper analyses efficient contracts for digital content, focusing on the music industry. It contributes to the quest for an efficient intellectual property rights environment for information goods. Moreover, it adds an interesting application to the field of behavioural economics. The model is set in a contract theory framework with the copyright holder being the principal and a consumer th...

This paper examines the economic role of the merchant coalition (kabu nakama) in Japan during the the eighteenth and the first half of the nineteenth century in Japan. During this period public sector enforcement of contracts was imperfect. Kabu nakama substituted for the public sector, using a multilateral punishment strategy. When the government (Bakufu) prohibited kabu nakama in 1841, the gr...

right of enforcement developed to the right of effective enforcement which both rooted in judicial protection. effective enforcement needs to foresee clear and useful, expeditious and cheap methods that helps the collection of defendant’s financial information and facilitates voluntary enforcement of judgment and finally use of professional and independent persons in execution process. in irani...