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Contradiction as a form of contractual incompleteness

Heller, D.; Spiegler, R.; (2008) Contradiction as a form of contractual incompleteness. The Economic Journal , 118 (530) pp. 875-888. 10.1111/j.1468-0297.2008.02153.x. Green open access

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Abstract

A simple model is presented, in which contradictory instructions are viewed as a type of contract incompleteness. The model provides a complexity-based rationale for contradictory instructions. If there are complexity bounds on the contract, there may be an incentive to introduce contradictions, leaving for another agent the task of interpreting them. The optimal amount of contradictions depends on the complexity bound, the conflict of interests with the interpreter and the institutional constraints on his interpretations. In particular, a higher complexity bound may result in a larger amount of contradictions.

Type: Article
Title: Contradiction as a form of contractual incompleteness
Open access status: An open access version is available from UCL Discovery
DOI: 10.1111/j.1468-0297.2008.02153.x
Publisher version: http://dx.doi.org/10.1111/j.1468-0297.2008.02153.x
Language: English
Additional information: "The definitive version is available at www3.interscience.wiley.com"
Keywords: Contracts
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/17319
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