Contract and game theory: Basic concepts for settings with finite horizons

Artikel

This paper examines a general model of contract in multi-period settings with both external and self-enforcement. In the model, players alternately engage in contract negotiation and take individual actions. A notion of contractual equilibrium, which combines a bargaining solution and individual incentive constraints, is proposed and analyzed. The modeling framework helps identify the relation between the manner in which players negotiate and the outcome of the long-term contractual relationship. In particular, the model shows the importance of accounting for the self-enforced component of contract in the negotiation process. Examples and guidance for applications are provided, along with existence results and a result on a monotone relation between 'activeness of contracting' and contractual equilibrium values.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Games ; ISSN: 2073-4336 ; Volume: 4 ; Year: 2013 ; Issue: 3 ; Pages: 457-496 ; Basel: MDPI

Classification and Topics

• Classification: Wirtschaft
• Subject: external enforcement ; self-enforcement ; negotiation ; agreements ; contractual equilibrium

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Watson, Joel
• Event: Veröffentlichung
• (who): MDPI
• (where): Basel
• (when): 2013

Further information

• DOI: doi:10.3390/g4030457
• Handle: http://hdl.handle.net/10419/98574
• Last update: 10.03.2025, 11:46 AM CET