Foundations of Incomplete Contracts
Posted: 9 Sep 1998
Date Written: August 1998
In the last few years, a new area has emerged in economic theory, which goes under the heading "incomplete contracting." However, almost since its inception, the theory has been under attack for its lack of rigorous foundations. In this paper, we evaluate some of the criticisms that have been made of the theory, in particular, those in Maskin and Tirole (1998). In doing so, we develop a model that provides a rigorous foundation for the idea that contracts are incomplete.
JEL Classification: D23
Suggested Citation: Suggested Citation