Inflexible Rules in Incentive Problems

作者: David E. M. Sappington , Tracy R. Lewis

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摘要: In practice, contracts involve "standard terms" or "rules," allowing for variations only under "exceptional" circumstances. We develop a simple model in which optimal display this feature, even the absence of transactions costs. Rules arise when an agent has "countervailing incentives" to misrepresent private information. These incentives are created by endowing with critical factor production ex ante. Applications regulatory, labor, and legal settings

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