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Foundations of Incomplete Contracts

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  • Oliver Hart
  • John Moore

Abstract

In the last few years, a new area has emerged in economic theory, which goes under the heading of "incomplete contracting" However, almost since its inception, the theory has been under attack for its lack of rigorous foundations. In this paper, we evaluate some of the criticisms that have been made of the theory, in particular, those in Maskin and Tirole (1999a). In doing so, we develop a model that provides a rigorous foundation for the idea that contracts are incomplete.

Suggested Citation

  • Oliver Hart & John Moore, 1999. "Foundations of Incomplete Contracts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 115-138.
    • Handle: RePEc:oup:restud:v:66:y:1999:i:1:p:115-138.
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    File URL: http://hdl.handle.net/10.1111/1467-937X.00080
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    References listed on IDEAS

    as
    1. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    2. Eric Maskin & John Moore, 1999. "Implementation and Renegotiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 39-56.
    3. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    4. Eric Maskin & Jean Tirole, 1999. "Two Remarks on the Property-Rights Literature," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 139-149.
    5. Imre Bárány, 1992. "Fair Distribution Protocols or How the Players Replace Fortune," Mathematics of Operations Research, INFORMS, vol. 17(2), pages 327-340, May.
    6. Eric Maskin & Jean Tirole, 1999. "Unforeseen Contingencies and Incomplete Contracts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 83-114.
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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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