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Download the Paper (331 K, PDF file) - February 1, 2006 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing.

ABSTRACT:
This paper presents analysis of contractual settings with complete but unverifiable information and where trade consists of a sequence of verifiable productive actions, between which renegotiation can occur. The main result identifies an equivalent, simplified model that can be used to calculate the set of implementable value functions. The result also shows that the detrimental effects of renegotiation between productive actions can be counteracted when the parties can sufficiently communicate with the external enforcer over time. Corollary results address the form of optimal contracts and the effect of irreversible productive actions.

SUGGESTED CITATION:
Joel Watson, "Contract and Mechanism Design in Settings with Multi-Period Trade" (February 1, 2006). Department of Economics, UCSD. Paper 2006-02.
http://repositories.cdlib.org/ucsdecon/2006-02