Partnering Contracts and the Inefficient Nash Equilibrium

18 Pages Posted: 20 Mar 2019

See all articles by Christina D. Tvarnoe

Christina D. Tvarnoe

Copenhagen Business School - CBS Law

Henriette Schleimann

Copenhagen Business School - CBS Law

Date Written: March 20, 2019

Abstract

This paper discusses partnering contracts in Denmark and Great Britain, analyses the legal content and applies game theory and the Prisoners’ Dilemma game on some of the legal clauses and objectives. The paper defines partnering contracts as alternative social contracts relevant when forming a strategic alliance or another long-term relationship with a certain degree of specificity and frequency. The paper focuses on partnering in the construction industry and compares the clauses in both Danish and British partnering contracts. Based on the analysis, the paper sets up a scientific definition regarding the aim of partnering contracts and shows that economic theory can explain the legal clauses in the partnering contract, and the partnering contract can solve inefficiency in the Nash equilibrium in the Prisoners’ Dilemma game. The partnering contract makes it possible to obtain the benefit from joint utility and the paper proposes some legal improvements in this regard.

Keywords: Partnering, game theory, contract law, joint utility, Nash equilibrium

Suggested Citation

Tvarnoe, Christina D. and Schleimann, Henriette, Partnering Contracts and the Inefficient Nash Equilibrium (March 20, 2019). Copenhagen Business School, CBS LAW Research Paper No. 19-13. Available at SSRN: https://ssrn.com/abstract=3356622 or http://dx.doi.org/10.2139/ssrn.3356622

Christina D. Tvarnoe (Contact Author)

Copenhagen Business School - CBS Law ( email )

Porcelaenshave 18B, 1
Frederiksberg 2000
Denmark

Henriette Schleimann

Copenhagen Business School - CBS Law ( email )

Porcelaenshave 18B, 1
Frederiksberg 2000
Denmark

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