Optimal single contracts in adverse selection and moral hazard scenarios.
The researchers looked at how to design contracts when one party has more information than the other, and when there is a risk of the other party not putting in enough effort. They found that in certain situations, it is best to offer just one contract to the other party. This is especially true when the outcomes are either all good or all bad, and when the distribution of outcomes follows a specific pattern. This means that in some cases, keeping things simple with just one contract can be the most effective way to deal with hidden information and potential laziness.