Cognition and incomplete contracts

Jean Tirole*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    113 Scopus citations

    Abstract

    Thinking about contingencies, designing covenants, and seeing through their implications is costly. Parties to a contract accordingly use heuristics and leave it incomplete. The paper develops a model of limited cognition and examines its consequences for contractual design. (JEL D23, D82, D86, L22).

    Original languageEnglish (US)
    Pages (from-to)265-294
    Number of pages30
    JournalAmerican Economic Review
    Volume99
    Issue number1
    DOIs
    StatePublished - Mar 2009

    ASJC Scopus subject areas

    • Economics and Econometrics

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