Smart Contracts vs Incomplete Contracts: A Transaction Cost Economics Viewpoint

Computer Law & Security Review, Volume 46, September 2022, 105710.

16 Pages Posted: 16 Nov 2018 Last revised: 18 Jan 2023

See all articles by Massimiliano Vatiero

Massimiliano Vatiero

University of Trento; Università della Svizzera italiana

Date Written: September 25, 2018

Abstract

Over the last years, with the sudden and rising appeal of blockchain technology, some scholars have begun to investigate smart contracts, namely blockchain-enforced agreements. According to enthusiastic (and sometimes naïve) views, smart contracts are supposed to allow parties to conduct transactions more efficiently than traditional or semantic contracts. This paper challenges that claim. I argue that because of the need for an efficiency-enhancing adaptation of institutional arrangements—a chief problem of transaction cost economics—smart contracts may incur higher transaction costs than semantic contracts.

Keywords: Adaptation, Blockchain, Enforcement, Incomplete contracts, Smart contracts, Transaction costs

JEL Classification: D23, D86, L14, L86, O33

Suggested Citation

Vatiero, Massimiliano, Smart Contracts vs Incomplete Contracts: A Transaction Cost Economics Viewpoint (September 25, 2018). Computer Law & Security Review, Volume 46, September 2022, 105710., Available at SSRN: https://ssrn.com/abstract=3259958 or http://dx.doi.org/10.2139/ssrn.3259958

Massimiliano Vatiero (Contact Author)

University of Trento ( email )

Via Inama, 5
Trento, Trento 38122
Italy

Università della Svizzera italiana ( email )

Via Giuseppe Buffi, n. 13
Lugano, Ticino 6900
Switzerland

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