Contracts and promises: an approach to pre-play agreements

Arbeitspapier

In line with the widely applied principle of just deserts, we assume that the severity of the penalty on a contract offender increases in the harm on the other. When this principle holds, the influence of the efficiency of the agreement on the incentives to abide by it crucially depends on whether actions are strategic complements or substitutes. With strategic substitutes, there is a conflict between Pareto-efficiency and the incentives to abide. The opposite tends to be true when actions are strategic complements. The results are interpreted in the context of legal contracts and in that of informal mutual promises.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Jena Economic Research Papers ; No. 2008,088

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Bargaining Theory; Matching Theory ; Contract Law ; Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
• Subject: Partnerships ; contracts ; pre-play communication ; legal enforcement ; social norms ; guilt ; Vertragstheorie ; Strafe ; Pareto-Optimum ; Soziale Norm

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Miettinen, Topi
• Event: Veröffentlichung
• (who): Friedrich Schiller University Jena and Max Planck Institute of Economics
• (where): Jena
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/31763
• Last update: 10.03.2025, 11:45 AM CET