Download This PaperInstallment Payments in Contracts for Systems Development
19 Pages Posted: 14 Oct 1999
Date Written: August 1999
Abstract
Two major issues in custom systems development are how to resolve moral hazard and how to motivate relation-specific investment. Sophisticated contractual terms are one solution, but not practical. We analyze a solution proposed by several legal practitioners -- the use of installment payments. We show that suitably designed installment payments can (partially) resolve moral hazard and motivate relation-specific investment.
JEL Classification: D82, L14, L86
Suggested Citation: Suggested Citation
Png, Ivan P. L. and Tao, Zhigang, Installment Payments in Contracts for Systems Development (August 1999). Available at SSRN: https://ssrn.com/abstract=179348 or http://dx.doi.org/10.2139/ssrn.179348
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