Incomplete contracts and the governance of complex contractual relationships

Article Abstract:

Complete contracts offer the concerned parties substantial flexibility in addressing potential contingencies. However, factors such as minimal drafting costs can affect flexibility costs and render the contract incomplete. Thus, contracting parties with incomplete contracts enter potential situations where they must face inefficient choices due to loss of flexibility. However, flexibility can be regained by setting ambiguous contract terms and by integrating other instruments of governance.

Research

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Quality Uncertainty, Search, and Advertising

Article Abstract:

Consumer decision regarding search and the decision to purchase advertised products is modeled. The effect of risk for the risk averse consumer is considered. Consumers who are risk averse and purchase in small quantities tend to purchase advertised products. Significant search costs increase the demand for quality.

Decision-making, Decision making, Purchasing

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Contractual Responses to the Common Pool: Prorationing of Crude Oil Production

Article Abstract:

Firm heterogeneity is examined for its effect on contracting success through differing bargaining positions. The level of concentration needed for private contracting success is evaluated. Programming is advocated for rent dissipation.

Petroleum

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