Getting Incentives Right
Getting Incentives Right

Author: Robert D. Cooter

Publisher: Princeton University Press

Published: 2016-12-13

Total Pages: 241

ISBN-13: 0691173745

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How tort, contract, and restitution law can be reformed to better serve the social good Lawyers, judges, and scholars have long debated whether incentives in tort, contract, and restitution law effectively promote the welfare of society. If these incentives were ideal, tort law would reduce the cost and frequency of accidents, contract law would lubricate transactions, and restitution law would encourage people to benefit others. Unfortunately, the incentives in these laws lead to too many injuries, too little contractual cooperation, and too few unrequested benefits. Getting Incentives Right explains how law might better serve the social good. In tort law, Robert Cooter and Ariel Porat propose that all foreseeable risks should be included when setting standards of care and awarding damages. Failure to do so causes accidents that better legal incentives would avoid. In contract law, they show that making a promise often causes the person who receives it to change behavior and undermine the cooperation between the parties. They recommend several solutions, including a novel contract called "anti-insurance." In restitution law, people who convey unrequested benefits to others are seldom entitled to compensation. Restitution law should compensate them more than it currently does, so that they will provide more unrequested benefits. In these three areas of law, Getting Incentives Right demonstrates that better law can promote the well-being of people by providing better incentives for the private regulation of conduct.

Optimal Contracts with Fairness Concerns
Optimal Contracts with Fairness Concerns

Author: Yin Chi Tam

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

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In an organization, the principal may care about both efficiency and fairness. In this paper, we study the optimal contracts between a principal and multiple agents when the principal favors a more even expost wage distribution. We characterize the principal's fairness concern by a convex shading cost function and it is shown that the optimal contract is either a fixed wage contract or an incentive contract. Moreover, interior solution exists under certain conditions where the principal would provide both fixed and incentive contracts to agents. We also show that the optimal contracts tend to be more hybrid if the shading cost becomes more convex and the fraction of the incentive contract would decrease as the principal cares more about fairness.

Philosophical Foundations of Contract Law
Philosophical Foundations of Contract Law

Author: Gregory Klass

Publisher: OUP Oxford

Published: 2014-12-18

Total Pages: 417

ISBN-13: 019102208X

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In recent years there has been a revival of interest in the philosophical study of contract law. In 1981 Charles Fried claimed that contract law is based on the philosophy of promise and this has generated what is today known as 'the contract and promise debate'. Cutting to the heart of contemporary discussions, this volume brings together leading philosophers, legal theorists, and contract lawyers to debate the philosophical foundations of this area of law. Divided into two parts, the first explores general themes in the contract theory literature, including the philosophy of promising, the nature of contractual obligation, economic accounts of contract law, and the relationship between contract law and moral values such as personal autonomy and distributive justice. The second part uses these philosophical ideas to make progress in doctrinal debates, relating for example to contract interpretation, unfair terms, good faith, vitiating factors, and remedies. Together, the essays provide a picture of the current state of research in this revitalized area of law, and pave the way for future study and debate.

Contract Choice
Contract Choice

Author: Alexandros Karakostas

Publisher:

Published: 2017

Total Pages: 0

ISBN-13:

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We present a simple principal-agent experiment in which the principals are allowed to choose between a revenue-sharing, a bonus, and a trust contract, to offer to an agent. Our findings suggest that a large majority of experimental subjects choose the revenue-sharing contract. This choice turns out to be not only the most efficient but also, at the same time, fair. Overall, the distribution of earnings is only mildly skewed towards the principal. We conclude that, under revenue-sharing contracts, concerns for fairness can be closely associated with the use of monetary incentives.

Incentives in Government Contracting
Incentives in Government Contracting

Author: R. Preston Mcafee

Publisher: Heritage

Published: 1988-12

Total Pages: 182

ISBN-13: 9781487581404

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Could the existing level of government services by provided at a lower cost? This study presents a convincing argument for incentive contracts as a means to this end. In a typical market economy, payments from the government to firms account for about one-half of government spending (excluding transfer payments). By changing the way in which a government pays the firms from which it procures goods and services, it would be possible to maintain the existing array of government programs at a lower price. The major finding of this study is that governments could significantly reduce their expenditures by making extensive use of incentive contracts where they currently use either fixed-price contracts or cost-plus contracts. An incentive contract shares cost overruns and cost underruns between the government and the contractor according to a predetermined ratio. An incentive contract stimulates competition among the firms bidding for the contract and shares the project's risk between the government and the selected firm, while giving the contractor incentives to keep incurred costs low. In addition to advocating the use of incentive contracts, the study analyses the consequences of preferential treatment for domestic content over foreign content in government procurement, discusses the choice for a government agency between producing a commodity or service in-house and contracting for its provision with a private firm, and examines the experience with contracting of both the Ontario government and the United States Department of Defense in order to draw lessons for government contracting in general.