Contract Theory Research Papers - Academia.edu (original) (raw)

I study the implications of economic shocks for objective and subjective CEO performance evaluation. A shock perturbs pay-setting parties' information about the firm and the CEO. I argue that pay-setting parties then lack information they... more

I study the implications of economic shocks for objective and subjective CEO performance evaluation. A shock perturbs pay-setting parties' information about the firm and the CEO. I argue that pay-setting parties then lack information they need for evaluating the CEO objectively, and de-emphasize objective CEO performance evaluation in favor of subjective CEO performance evaluation; over time, pay-setting parties become better informed about the firm as well as the CEO, and increasingly use again objective CEO performance evaluation. My evidence, which uses data on objective and subjective CEO performance evaluation in US executive pay between 1992 and 2013, is consistent with my argument.

It has long been standard in agency theory to search for incentive-compatible mechanisms on the assumption that people care only about their own material wealth. However, this assumption is clearly refuted by numerous experiments, and we... more

It has long been standard in agency theory to search for incentive-compatible mechanisms on the assumption that people care only about their own material wealth. However, this assumption is clearly refuted by numerous experiments, and we feel that it may be useful to consider nonpecuniary utility in mechanism design and contract theory. Accordingly, we devise an experiment to explore optimal contracts in an adverse-selection context. A principal proposes one of three contract menus, each of which offers a choice of two incentive-compatible contracts, to two agents whose types are unknown to the principal. The agents know the set of possible menus, and choose to either accept one of the two contracts offered in the proposed menu or to reject the menu altogether; a rejection by either agent leads to lower (and equal) reservation payoffs for all parties. While all three possible menus favor the principal, they do so to varying degrees. We observe numerous rejections of the more lopside...

The most of economic analysis of law uses economic efficiency as a normative criterion or for the purpose of positive analysis. The term Economic Efficiency refers to the relationship between aggregate benefits and costs to the... more

The most of economic analysis of law uses economic efficiency as a normative criterion or for the purpose of positive analysis. The term Economic Efficiency refers to the relationship between aggregate benefits and costs to the individuals concerned. Among the widely used efficiency criteria are the Pareto Optimality, the Kaldor-Hicks, the Cost-Benefit and the Wealth Maximization criterion. In this essay, we discuss economic efficiency as a tool for the social choice among the alternative legal rules. Discussion is carried out by using illustrative examples. We show that in several contexts the efficiency can serve as a useful tool for comparing the legal rules. However, it has serious limitations as well. In several situations, the efficiency criteria can fail to compare legal rules or can lead to contradictory rankings. Moreover, the assumptions underlying some of the efficiency criteria do not hold always. We discuss merits and demerits of various efficiency criteria. It shown that in the real world, economic efficiency has limitations as a guide for making social choice from among the legal institutions.

We compare the characteristics of real-world financial contracts to their counterparts in financial contracting theory. We do so by studying the actual contracts between venture capitalists (VCs) and entrepreneurs. The distinguishing... more

We compare the characteristics of real-world financial contracts to their counterparts in financial contracting theory. We do so by studying the actual contracts between venture capitalists (VCs) and entrepreneurs. The distinguishing characteristic of VC financings is that they ...

The interrelatedness between computer systems, networks, code, and traditional law and legal frameworks continues to pose a number of important and vexed questions. This report will consider one area of the relationship: legal recognition... more

The interrelatedness between computer systems, networks, code, and traditional law and legal frameworks continues to pose a number of important and vexed questions. This report will consider one area of the relationship: legal recognition of distributed ledger technology (DLT) or blockchain applications. Specifically, registers appended to blockchains (thereby creating “blockchain registries”), and “smart contracts” executed on blockchains

This work demonstrate the application of the civil principle of the social function of the contract to the environmental protection, by the construction of the concept of environmental function of the contract. For this, it is necessary... more

This work demonstrate the application of the civil principle of the social function of the contract to the environmental protection, by the construction of the concept of environmental function of the contract. For this, it is necessary to understand the updated classic concept of contract and the peculiarities of its contemporary profile. The environmental function of contract may be used through the public action, by initiative of people that are equalized to the parts, therefore affected by the effect of the polluting agreement, being able both the parts to be responsible for the environmental damage. The revision of the polluting contract can be judicial or administrative, like the commitment of behavior adjustment.
Este trabalho tem por objetivo demonstrar a aplicação do princípio civil da função social do contrato à proteção do meio ambiente, através da construção do conceito de função ambiental do contrato. Para isso, é necessário compreender a inadequação do conceito clássico do contrato e as peculiaridades do seu conceito contemporâneo. Defende-se a operacionalização da função ambiental do contrato através da ação civil pública, por iniciativa de terceiros que se equiparam às partes, pois afetados pelos efeitos do pacto poluidor, podendo ambas as partes serem responsabilizadas pelo dano ambiental. A revisão do contrato poluidor pode ser judicial ou administrativa, por compromisso de ajustamento de conduta.

The Theses LVI belong to a series of hitherto unpublished early manuscripts of the Dutch humanist and jurisconsult Hugo Grotius (1583-1645) that were acquired by the University of Leiden in 1864. It is not certain when the Theses were... more

The Theses LVI belong to a series of hitherto unpublished early manuscripts of the Dutch humanist and jurisconsult Hugo Grotius (1583-1645) that were acquired by the University of Leiden in 1864. It is not certain when the Theses were written, but preliminary research on the physical manuscript and the sources cited indicate two possible windows. The first is around 1602-1605, that is roughly at a time when Grotius was also working on his Commentary on the Law of Prize and Booty (De Iure Praedae Commentarius). The second dating places the genesis of the manuscrbipt around 1613-1615.
In the context of Grotius’ writings, the Theses LVI assume an important position for several reasons: They raise questions about state formation, the duty of citizens to the state and the right of political resistance in far greater detail than in any other work of the celebrated Dutch humanist. The Theses LVI also feature important reading notes that yield priceless insights into the sources that Grotius directly consulted and their influence on his ideas. The manuscript grants modern scholars a unique glimpse into the working mind of its author. Evidence points not only to the ferocious haste with which Grotius wrote his works, but also the occasional sloppiness of his reading and research habits."""

Apresentação do modelo básico de sinalização com foco no artigo do Spence (1973) "Job Market Signaling".

Nous analysons les déterminants des renégociations des crédits en France durant la période 1999-2015. Pour modéliser le processus de renégociation nous prenons en compte les caractéristiques du contrat de prêt, de l’entreprise et de la... more

Nous analysons les déterminants des renégociations des crédits en France durant
la période 1999-2015. Pour modéliser le processus de renégociation nous prenons
en compte les caractéristiques du contrat de prêt, de l’entreprise et de la banque.
Pour tenir compte de l’endogénéité de la décision et du degré de renégociation nous
utilisons la procédure de Wooldrige (2014). Nous montrons que seules les caractéristiques
du prêt et de l’entreprises ont un impact sur la décision de renégociation.
La maturité, le montant et la définition du prêt sont les caractéristiques les plus
susceptibles d’être renégociées par les grandes entreprises en France.

This essay argues that substantive fairness - defined here as fairness with respect to a contract’s terms - is a distinct virtue of good contracts. The essay begins by identifying two possible standards against which the fairness of a... more

This essay argues that substantive fairness - defined here as fairness with respect to a contract’s terms - is a distinct virtue of good contracts. The essay begins by identifying two possible standards against which the fairness of a contract’s terms might be assessed: competitive market prices and standard or “normal” prices. It then argues that the most compelling reason to care about substantive fairness is that contracts at non-normal prices may disrupt planning and hence our ability to lead self-directed, autonomous, lives. However, the label “substantively unfair” is properly attached only where the contract price deviates significantly, both relatively and absolutely, from the normal price, and where the worse-off party cared about price, was not making a gift, was aware of the value of what it was selling (if a seller), and was not in a better position than the advantaged party to obtain the normal price. In the essay’s final section, it is argued that while some conceptions of substantive fairness may be difficult or dangerous for courts to apply, the conception defended in this essay is not.

While prior research regarding strategic projects recognizes the tension inherent in interfirm relationships, less is understood of the impact of risk sharing in the design of the contracts guiding those relationships. This investigation... more

While prior research regarding strategic projects recognizes the tension inherent in interfirm relationships, less is understood of the impact of risk sharing in the design of the contracts guiding those relationships. This investigation illuminates important performance elements of projects as they differ in the amount of contractual risk that is shared among firms. Through a multivariate analysis of 240 United States defense department R&D and new product development contracts, we found that defense contracts with partner risk sharing built in involve more change and growth than their concentrated risk counterparts. Our results suggest that projects, when managed through interfirm contracts, are more likely to involve strategic change when risk is shared than when either the buyer or seller assumes full design, technical, and/or financial risk. The results further suggest that projects containing shared buyer and seller risk enhance the prospects of joint gain through the generation of opportunities for learning.

This paper empirically considers the role of preplanned exits (the investor's initial strategy to sell the investee firm via an acquisition or an initial public offering (IPO) at the time of initial contract with the entrepreneur), legal... more

This paper empirically considers the role of preplanned exits (the investor's initial strategy to sell the investee firm via an acquisition or an initial public offering (IPO) at the time of initial contract with the entrepreneur), legal conditions and investor versus investee bargaining power in the allocation of cash flow and control rights in entrepreneurial finance. We introduce a sample of 223 entrepreneurial investee firms financed by 35 venture capital funds in 11 continental European countries, and these data indicate the following. First, preplanned acquisition exits are associated with stronger investor veto and control rights, a greater probability that convertible securities will be used, and a lower probability that common equity will be used; the converse is observed for preplanned IPOs. Second, investors take fewer control and veto rights and use common equity in countries of German legal origin, relative to Socialist, Scandinavian, and French legal origin. Third, more experienced entrepreneurs are more likely to get financed with common equity and less likely to be financed with convertible preferred equity, while more experienced investors are more likely to use convertible preferred equity and less likely to use common equity.

Introduction to Contract Theories and The Justification of Contractual Obligations comprise Chapters 2 and 4 of Contract Theory (Oxford University Press, 2004). The book provides a comprehensive discussion of, and contribution to,... more

Introduction to Contract Theories and The Justification of Contractual Obligations comprise Chapters 2 and 4 of Contract Theory (Oxford University Press, 2004). The book provides a comprehensive discussion of, and contribution to, contemporary contract theory. Part 1 examines methodological issues, setting out frameworks for distinguishing different kinds of theoretical work about contract law and for evaluating the interpretive theories that are the book's focus. Part II, which includes the above chapters, discusses general theories of contract - theories that attempt to explain the basic notion of contractual obligation and, by implication, most of the main substantive features of contract law. An example is the idea that contractual obligations are rights-based promissory obligations. Introduction to Contract Theories explains the importance, when comparing general theories, of distinguishing analytic questions about the nature of contractual obligations (e.g., are contracts promissory obligations or reliance-based obligations) from normative questions about the justification for contractual obligations (e.g., are contractual obligations justified by rights-based moralities or utilitarian moralities) and provides a classification scheme based on this distinction. The Justification of Contractual Obligations then discusses the normative question in more detail, focusing on rights-based and utilitarian accounts of contract law (using economic theories as the main example of the latter). The chapter explains the basic assumptions of each theory, how each account for the main features of contract law, and the most important objections to each theory. It is argued that despite the radically different explanations of the law offered by rights-based and utilitarian theories (as highlighted by their approaches to remedies), each fits equally well (or poorly) with the main contract law doctrines. The main differences between rights-based and utilitarian theories concern how well each is able to account for the fact that contract law, like law generally, is presented and understood from the internal perspective as both justified (morally) and transparent (meaning that the reasons for a rule or decision are the real reasons). The chapter concludes that the most significant difference between these two groups of theories is that rights-based theories better satisfy the transparency criterion. Finally, Part III of the book examines in more detail the theoretical issues raised by the main substantive contract law doctrines (e.g., offer and acceptance, interpretation, remedies, etc.). An overview of this discussion can be found in the Preface and Table of Contents that are available to download together with Chapters 2 and 4.

Kurz vor der Jahrtausendwende gelang Thomas Donaldson und Thomas D. Dunfee mit „Ties that Bind“, einen Ansatz der Wirtschafts- und Unternehmensethik zu entwickeln, der den Eindruck einer neuen Stoßrichtung erweckte. Mit der Anwendung... more

Kurz vor der Jahrtausendwende gelang Thomas Donaldson und Thomas D. Dunfee mit „Ties that Bind“, einen Ansatz der Wirtschafts- und Unternehmensethik zu entwickeln, der den Eindruck einer neuen Stoßrichtung erweckte. Mit der Anwendung kontraktualistischer Methodik bei der „Integrated Social Contract Theory“ sollten drei Probleme der Wirtschaftsethik gelöst werden. Erstens fehlte modernen Konzepten der Wirtschafts- und Unternehmensethik, wie zum Beispiel dem Stakeholder-Ansatz, eine normative Legitimationsbasis, die ihr eigener Ansatz liefern sollte. Zweitens böten klassisch-ethische Schulen wie der Kantianismus oder die Gerechtigkeitstheorie von Rawls keine Antworten auf komplexe Einzelfragen des wirtschaftlichen Handelns. Dies führe zum dritten Problem, dass nämlich keine kulturtolerante, sondern nur eine vermeintlich objektiv orientierte Betrachtung möglich sei. Beide Problemstellungen sollte Donaldsons und Dunfees Ansatz auflösen und dabei sowohl empirisch als auch normativ sein. Dazu sollte das Konzept den Entscheidungsträgern der Wirtschaft eine allgemein anwendbare Entscheidungsbasis bieten, da diese zu den wichtigsten Verantwortungsträgern der modernen Welt gehörten.
Diese Herangehensweise stieß auf „offene Ohren“ in der Managementtheorie der Vereinigten Staaten und prägt dort bis heute die Managementlehre.
In diesem Aufsatz wird der Ansatz von Donaldson und Dunfee vorgestellt und kritisch betrachtet.

This article presents results from the first statistically significant study of cost escalation in transportation infrastructure projects. Based on a sample of 258 transportation infrastructure projects worth US$90 billion and... more

This article presents results from the first statistically significant study of cost escalation in transportation infrastructure projects. Based on a sample of 258 transportation infrastructure projects worth US$90 billion and representing different project types, geographical regions, and historical periods, it is found with overwhelming statistical significance that the cost estimates used to decide whether such projects should be built are highly and systematically misleading. Underestimation cannot be explained by error and is best explained by strategic misrepresentation, that is, lying. The policy implications are clear: legislators, administrators, investors, media representatives, and members of the public who value honest numbers should not trust cost estimates and cost-benefit analyses produced by project promoters and their analysts.

This paper tries to elucidate on the significant implications of Bonifacio’s idea of revolution.

Third parties protection has been an extensive issue for the shipping community over the last century. Although this problem has been solved to some extent in practice by various means of circumvention created by the industry, it remains... more

Third parties protection has been an extensive issue for the shipping
community over the last century. Although this problem has been solved to
some extent in practice by various means of circumvention created by the
industry, it remains conceptually obscure. A substantial obstacle with third
party protection is the classic perspective of contract law, which considers
a contract to be a bilateral promise between the parties. However, it can be
argued that in the modern factual context of the shipping industry, where
third parties are the pivots of the business, the reliance perspective and a
particular aspect of reliance perspective related to third parties could be
an alternative way of looking at the issue de lege ferenda

Urban population in India has been rising rapidly as millions of migrants are moving to urban areas aspiring for higher earning and better living. The number of urban poor is also growing and a significant number of these poor find spaces... more

Urban population in India has been rising rapidly as millions of migrants are moving to urban areas aspiring for higher earning and better living. The number of urban poor is also growing and a significant number of these poor find spaces in slums and continue to struggle for better living standards. Improving their conditions call for significant efforts from the governments for better policy designs. However, better policy design requires understanding the commonalities and differences across slums within and between cities. In this paper, we conduct a comparative study of representative slums across three largest metro cities in India through primary surveys. We find certain characteristics, such as large average household size, poor housing quality, low female labour market participation and high school enrolment rates among children, to be common across and within three cities. Our study however reveals crucial differences between the cities in the demographic pattern of migration and its temporal element. And that in turn brings out considerable heterogeneity among different groups within slums of each cities with respect to living standards, access to civic amenities like sanitation facilities and drinking water. Moreover, there exists major cross-city differences in adult literacy rates across gender, consumption pattern, and subjective well-being. Overall, we find that slums in Mumbai on average perform much better in various living condition and social indicators than slums in Delhi and Kolkata.

Hobbes’s political philosophy starts from a number of premises that are supposed to be self-evident, supplemented by various observations from experience. These statements are examined critically and in their interrelatedness in order to... more

Hobbes’s political philosophy starts from a number of premises that are supposed to be self-evident, supplemented by various observations from experience. These statements are examined critically and in their interrelatedness in order to find out to what extent Hobbes provides a convincing system of thought. The importance of the basis of man’s actions, his self-interest, is inquired, since it serves as the basis of his practical philosophy. After this, Hobbes’s views on ‘moral’ notions are expounded. As it turns out, Hobbes maintains a number of concepts that have such a connotation, but interprets these in a specific way. The article is concluded with a modest systematic reconstruction of Hobbes’s main thoughts in practical philosophy.

Megaproject Planning and Management: Essential Readings contains the seminal articles from the growing body of research on megaproject planning and management along with an original introduction by the editor, Bent Flyvbjerg. The leading... more

Megaproject Planning and Management: Essential Readings contains the seminal articles from the growing body of research on megaproject planning and management along with an original introduction by the editor, Bent Flyvbjerg. The leading and most cited authority in the field, Flyvbjerg has used crowdsourcing and 25 years of experience to cherry-pick from several hundred articles and books the writings that define the field. This volume will be an indispensable source for those wishing to speak with authority about how megaprojects are prepared, delivered, and fought over. The target audience is students, academics, practitioners, and media pundits alike, as well as communities affected by megaprojects.

L'articolo ricostruisce la clausola di tolleranza nel sistema di diritto privato interno. Nella prima parte, il saggio esamina gli effetti del comportamento tollerante sul contratto: il mancato esercizio di un rimedio previsto dal... more

L'articolo ricostruisce la clausola di tolleranza nel sistema di diritto privato interno. Nella prima parte, il saggio esamina gli effetti del comportamento tollerante sul contratto: il mancato esercizio di un rimedio previsto dal contratto potrebbe implicare la sua non esigibilità. Nella seconda parte, si indagano gli effetti della clausola con cui le parti cercano di evitare che il comportamento tollerante del creditore possa rilevare come ragione di non esigibilità della pretesa.

Back cover text: Megaprojects and Risk provides the first detailed examination of the phenomenon of megaprojects. It is a fascinating account of how the promoters of multi-billion dollar megaprojects systematically and self-servingly... more

Back cover text: Megaprojects and Risk provides the first detailed examination of the phenomenon of megaprojects. It is a fascinating account of how the promoters of multi-billion dollar megaprojects systematically and self-servingly misinform parliaments, the public and the media in order to get projects approved and built. It shows, in unusual depth, how the formula for approval is an unhealthy cocktail of underestimated costs, overestimated revenues, undervalued environmental impacts and overvalued economic development effects. This results in projects that are extremely risky, but where the risk is concealed from MPs, taxpayers and investors. The authors not only explore the problems but also suggest practical solutions drawing on theory, experience and hard, scientific evidence from the several hundred projects in twenty nations and five continents that illustrate the book. Accessibly written, it will be the standard reference for students, scholars, planners, economists, auditors, politicians and interested citizens for many years to come.