Decision Sciences
3 years ago

Hidden third-party agents restore efficiency in contracts, preventing renegotiation issues.

SSRN Electronic Journal
When do incomplete contracts matter?
Aristotelis Boukouras, Kostas Koufopoulos, Xuyuanda Qi, Giulio Trigilia

Paper Summary

Related papers

Economics, Econometrics and Finance
4 years ago

Monetary Policy Decisions Shaped 1970s Inflation Volatility, Finds Study

Macroeconomic Analysis
Macroeconomic Trends
Oil Price Shocks
3 views
Business, Management and Accounting
7 years ago

Stabilization policies crucial for well-being, downturns disproportionately harm vulnerable groups.

Retirement Planning
Monetary Models
Macroeconomic Analysis
3 views
Economics, Econometrics and Finance
8 years ago

Unemployment could drive down wages and fuel inflation

Macroeconomic Trends
Monetary Models
Macroeconomic Analysis
3 views

The introduction of a hidden third-party agent in certain situations can help solve problems in contracts without risking collusion. This agent is only revealed off-equilibrium and with some probability, and its existence and identity are unknown to others. In many real-world cases, this hidden agent can restore the efficient allocation of resources. If this agent doesn't know the full picture, there's a way to make sure the plan works.