Cognition and Incomplete Contracts
- (pp. 265-94)
Abstract
Thinking about contingencies, designing covenants, and seeing through their implications is costly. Parties to a contract accordingly use heuristics and leave it incomplete. The paper develops a model of limited cognition and examines its consequences for contractual design. (JEL D23, D82, D86, L22)Citation
Tirole, Jean. 2009. "Cognition and Incomplete Contracts." American Economic Review, 99 (1): 265-94. DOI: 10.1257/aer.99.1.265JEL Classification
- D23 Organizational Behavior; Transaction Costs; Property Rights
- D82 Asymmetric and Private Information
- D86 Economics of Contract: Theory
- L22 Firm Organization and Market Structure