Contract Economics

In this paper, I examine the application of game theory to legal disputes over financial contracts, offering a novel perspective on the strategic interactions that shape litigation outcomes in the financial sector. By leveraging game-theoretic models, I analyze the decision-making processes of parties involved in contract disputes, including plaintiffs, defendants, and judiciary bodies. My research explores how these models can be used to predict litigation strategies, inform settlement negotiations, and anticipate judicial decisions in the context of complex financial agreements.
I begin by establishing a theoretical framework that bridges game theory concepts with legal principles relevant to financial contract disputes. I then apply this framework to various scenarios, including securities fraud litigation and derivative contract conflicts, demonstrating how game theory can provide insights into the behavior of rational actors under conditions of uncertainty and information asymmetry.
My findings suggest that game theory offers a valuable analytical tool for understanding and navigating the intricacies of legal conflicts in the financial domain. By illuminating the strategic underpinnings of dispute resolution, this research contributes to both academic discourse and practical applications in law and finance. I conclude by discussing the implications of my analysis for legal practitioners, policymakers, and researchers, while also acknowledging the limitations of game-theoretic approaches and proposing avenues for future research.

The choice of the right fi scal regime represents the main object of the energy policy concerning hydrocarbon exploration and production for the state government. For the operator and service companies it represents the terms and conditions for practical conducting of the process in whole. This paper analyse aspects of agreements used in the petroleum industry. Elements of agreement, regardless of regime, have been described together with their advantages and disadvantages. Due to the fact that the fi scal regime has to be chosen to attract companies willing to invest in exploration and production, it represents a relevant part of the business strategy and also a base for the decision making process during start up. It has to minimize the risk for the both parties involved and maximize the state's share during the exploitation phase. For the companies, it has to be attractive enough to balance risks during the exploration phase with profi ts gained during the exploitation phase. The aim of this paper is to show the existing fi scal systems in the petroleum industry and to analyze the process for concluding a contract regarding the exploration and production of hydrocarbons. An overview of diff erent business practices in the oil and gas industry with a detailed breakdown of the contract terms between the parties involved have been described in the paper. The aim of this paper is to show the diff erent possibilities of fi nancial regimes which could help during the negotiation process for conducting hydrocarbon exploration and production for everyone involved.

For many firms, designing governance structures for their inter-organizational relationships is a key strategic challenge. Strategic management and other management scholars have successfully applied concepts from sociology, economics, and organization theory to analyze this challenge. Despite their attention to the relational dimension of governance, however, these scholars have drawn very little from a stream of economics research that directly addresses relational governance and has become established in that field: namely, the economics of relational contracts. In this essay, we discuss what the economics of relational contracts can add to management studies of the governance of interorganizational relationships. We explain how the economics of relational contracts sheds light on the relative roles of, and interactions between, the shadow of the past and the shadow of the future in supporting interorganizational collaboration. In so doing, we suggest how economic models of relational contracts can radically change the interpretation of observations that management scholars have made about collaborative relationships they have studied. We also show how the economics of relational contracts literature can contribute to the extended debate about whether and when contracts are substitutes or complements for unwritten agreements. Finally, we discuss implications for the ways in which the economics of relational contracts can help us to better understand the governance of inter-organizational relationships.

We contribute to the literature on procurement and contract management in the public sector by reporting on the current practice of public and private sector organisations and the outcomes of that practice. In particular, we chart the effectiveness of certain procurement and contract management actions in moderating potential supplier opportunism. The article is based upon a quantitative analysis of 180 questionnaire responses provided by procurement and contract managers. The results are not totally conclusive, but do provide evidence to suggest that opportunism is a significant possibility, and that certain procurement and contract management actions can assist organisations in dealing with that possibility. The results suggest little difference between public and private sector experiences.

We introduce, in a multiple agents moral hazard setting, a status variable which reflects an agent's claim to social recognition in her work. Status is a scarce resource so that increasing an agent's status requires that another agent's status is decreased. High status agents are more willing to exert effort in exchange for monetary compensations while well-paid agents care more about recognition so that they would exert a higher effort in exchange for a higher status. We obtain results coherent with actual management practices and management experts recommendations such as: (i) status and income should be complements; (ii) egalitarianism is desirable in a static context; (iii) in a long-term work relationship, promotions are more effective than direct monetary incentives.

Um posicionamento diante do artigo Teoria dos Contratos do Prof. Antonio Delfim, apontando outras implicações e possibilidades abertas pela contribuição de Oliver Hart e Bengt Holmström, os dois  premiados pelo Nobel de Economia, no enfrentamento dos atuais problemas da economia brasileira.

Extraio algumas virtualidade da perspectiva da policymaking, do ensaio Brazilian politics threaten environmental policies  de Philip M. Fearnside, sugerindo algumas iniciativas que nos assegure irmos além de uma mera denúncia das implicações da PEC-65 em tramitação no Congresso Brasileiro.

This note derives the optimal compensation contract with subjective evaluation when the principal and agent may not agree regarding performance. The optimal contract takes the form of a bonus payment whenever the principal believes performance is acceptable, but with the payment of a penalty by the principal whenever the agent disagrees with a negative evaluation by the principal. The efficiency of the relationship is increasing with the degree of correlation, a result that is consistent with the importance of trust for an efficient employment relationship. * I would like to thank Jan Zabojnik for very helpful comments.

Interfirm relationships are at the very core of new trends in the present business environment, trends such as market orientation, time-based competition, supply-chain management, strategic partnerships and electronic business. More and more frequently, these relationships are being examined as a major source of value creation in the fields of strategic management, marketing, operations management, logistics and information systems. The attention paid to interfirm relationships has resulted in an extensive but somewhat fragmented literature on the subject. It is therefore increasingly difficult to get a clear idea of the ins and outs of these buyer-seller relationships. The present theoretical study addresses this shortfall by providing an integrative framework of interfirm relationships as a means of value creation. It aims at fostering a better understanding of these relationships and at clearly positioning value creation within interfirm relationships. A synthesis of the theories used to study interfirm relationships and a cross-disciplinary literature review allow the authors to identify, and then to elucidate, three key elements of interfirm relationships: (1) the outcomes of interfirm relationships, (2) the nature of interfirm exchange and (3) the governance of interfirm exchange. These elements are combined in a conceptual model showing their interrelation. In short, a set of six factors -environmental, situational, behavioral, regulative, structural and coordinative -is identified as determining the nature and governance of exchange. Continuums ranging from the adversarial to the collaborative and from the transactional to the relational are used to characterize interfirm exchange. According to the positioning of the exchange nature and governance in these continuums, interfirm relationships result in more or less value creation and/or value 3 destruction. Finally, a discussion of the conceptual model outlines an array of future directions in research. In an academic perspective, the conceptual model put forward brings some much needed clarity to the multiplicity of approaches used on the topic. It should also enable an accurate distinction between over-and under-explored avenues of research. Furthermore, this model can be integrated into future research on the emerging concepts of relationship value, relationship management, relational competence and relational capital. From a managerial standpoint, the present study fosters a better understanding of buyer-seller relationships. This is important because interfirm relationships are crucial if firms are to adapt to the various new trends shaping today's business world. This study supports the views of managers willing to use interfirm relationships as a means of value creation.

We examine the characteristics of endogenously-determined optimal incentive contracts for agents who envy each other and work for a risk-neutral (non-envious) principal. Envy makes each agent care not only about absolute consumption but also about relative consumption. Incentive contracts in this setting display properties strikingly different from those associated with optimal contracts in standard principal-agent theory. We derive results that help explain some of the discrepancies between the predictions of principal-agent theory and the stylized facts about realworld contracts. We also show how seemingly envious behavior can emerge with asymmetric information even when envy is not biologically hard-wired into agents' preferences.

Interfirm relationships are at the very core of new trends in the present business environment, trends such as market orientation, time-based competition, supply-chain management, strategic partnerships and electronic business. More and more frequently, these relationships are being examined as a major source of value creation in the fields of strategic management, marketing, operations management, logistics and information systems. The attention paid to interfirm relationships has resulted in an extensive but somewhat fragmented literature on the subject. It is therefore increasingly difficult to get a clear idea of the ins and outs of these buyer-seller relationships. The present theoretical study addresses this shortfall by providing an integrative framework of interfirm relationships as a means of value creation. It aims at fostering a better understanding of these relationships and at clearly positioning value creation within interfirm relationships. A synthesis of the theories used to study interfirm relationships and a cross-disciplinary literature review allow the authors to identify, and then to elucidate, three key elements of interfirm relationships: (1) the outcomes of interfirm relationships, (2) the nature of interfirm exchange and (3) the governance of interfirm exchange. These elements are combined in a conceptual model showing their interrelation. In short, a set of six factors -environmental, situational, behavioral, regulative, structural and coordinative -is identified as determining the nature and governance of exchange. Continuums ranging from the adversarial to the collaborative and from the transactional to the relational are used to characterize interfirm exchange. According to the positioning of the exchange nature and governance in these continuums, interfirm relationships result in more or less value creation and/or value 3 destruction. Finally, a discussion of the conceptual model outlines an array of future directions in research. In an academic perspective, the conceptual model put forward brings some much needed clarity to the multiplicity of approaches used on the topic. It should also enable an accurate distinction between over-and under-explored avenues of research. Furthermore, this model can be integrated into future research on the emerging concepts of relationship value, relationship management, relational competence and relational capital. From a managerial standpoint, the present study fosters a better understanding of buyer-seller relationships. This is important because interfirm relationships are crucial if firms are to adapt to the various new trends shaping today's business world. This study supports the views of managers willing to use interfirm relationships as a means of value creation.

We examine technology alliance contracts in detail, to explore if formal contract terms vary with prior alliances. Traditionally, formal governance has been viewed as the means to address the coordination difficulties inherent in alliances, via explicit contractual mechanisms. Formal contracting, however, is costly and not the only solution to the coordination problem. Relational governance, or discipline mechanisms outside the contract itself, can encourage cooperative behavior between partners. More specifically, repeated interactions can, through implicit mechanisms, reduce the threat of non-cooperative behavior in alliances. We use a case study approach to explore the contract mechanisms that reveal a possible interaction between contract structure and prior alliances. Based on our examination of contract terms, we devise a coding scheme to allow comparison of contracts empirically. Using our preliminary sample of 42 technology alliance contracts in the telecommunications equipment and microelectronics industries, we find that prior alliances are linked with contract structure. Interestingly, contracts are more complete or detailed when firms have prior alliances (whether with the same firm or other firms). This suggests that firms learn to draft more detailed contracts with prior alliance experience. In contrast, firms appear to draft less complete contracts when they have concurrent alliances with the same firm. Thus, concurrent alliances may represent the development of trust or the exchange of 'mutual hostages', both of which deter non-cooperative behavior and, thus, substitute for more formal governance.

Esta seção apresenta os principais argumentos que revelam a importância da biodiversidade para a humanidade, tanto aquela domesticada e cultivada, como aquela outra selvagem que se manifesta em habitat terrestres (florestas), aquáticos (mares, lagos e rios) e mixtos (mangues).

Nesta nota ressalta-se a particularidade do programa de Ronald Coase no que concerne a relação da economia com outras áreas de conhecimento e com a própria economia mainstream. Mostra-se que ele não se alinha com o dito “imperialismo econômico” que busca, através da economia compreender os outros sistemas sociais, dado que defende o oposto, propõe  que se amplie o conhecimento do sistema econômico através da exploração da contribuição das outras disciplinas. Uma outra particularidade é que  Coase  convoca as instituições para mostrar, a)  a impropriedade de considerar-se que através do mercado se transaciona entes físicos, já que considera que se transaciona não coisas, mas  entes legais (direitos),  b) e a propriedade de considerar que a analise  microeconômica seja focada não mais nos mecanismos de determinação de preço, mas nos mecanismos de determinação dos custos de transação, os quais são associados ao ambiente institucional.  Mas a despeito dos evidentes avanços Coase, ainda opera com as instituições como se fossem uma "caixa preta", o que nos permite apontar para uma superação das limitações da suas análise por meio da análise pragmática de John Searle.

This paper proposes a simple framework to study incentives and matching in the market for teachers. The framework is used to investigate the consequences of introducing incentive pay for teachers when contracts have both a matching and an incentive effect. Our analysis suggests that school competition and teacher incentives cannot be studied in isolation from one another. (JEL: D73, I20, J45, L31)

Este trabalho toma uma "situação quadro" do tipo: A, ao produzir, danifica B, para mostrar a evolução dos fundamentos da política ambiental, e, com este intento, parte dos primórdios, isto é, do paradigma do Comando e controle, passa pelo enfoque fundado na Economia do bem estar e pela abordagem da Estratégia empresarial fundada na produtividade dos insumos, para chegar a abordagem fundada na Nova economia institucional (NEI) , tanto na sua vertente da Economia dos custos de transação (ECT), como na sua versão da Análise econômica do direito (AED) e conclui, mostrando a necessidade do ajuste da abordagem da NEI as novas exigências imposta pelas novas tecnologias geradoras de externalidades negativas com impactos ambientais planetário e irrerversível.

This paper studies the decision of altering the composition of a team consisting of two agents in the context of asymmetric information. The resulting moral hazard problem is influenced greatly by the presence of a team-specific productivity parameter, which, under certain conditions, determines the decision of team-switching. In studying an extended framework of an existing problem, we find several implications for organizational design as well as incentives, including the presence of the ratchet effect due to repeated interactions between contracting parties. We conduct two distinct analyses — first, where agents are partners, and their abilities are taken to be exogenous. In assuming equal sharing rules, we find a threshold for the parameter that decides optimal team-switching. Furthermore, in the case with two types of agents (high and low ability), we take the ratchet effect into account and study four instances of remuneration schemes that are feasible for the principal. In the two-agent, two-period, two-type model, team-switching is found to be optimal only if the team-specific productivity parameter lies below a threshold determined by various endogenous factors.

This study investigates contracting mechanisms in situations of opportunistic disputes between organizations. We specifically explore the relationships between the formal versus informal nature of opportunism and the formal versus informal nature of contractual governance. We use a unique data set of 102 buyer-supplier disputes to explore in depth different types of opportunism—that is, strong form versus weak form opportunism—and different types of contracting mechanisms—that is, the controlling and coordinating functions of formal contracts and the cooperative and competitive sides of relational contracts. Our detailed empirical analysis suggests distinct relationships between the different contracting mechanisms, the different types of opportunism, and the level of legal fees necessary to deal with the dispute. These findings enable us to derive implications for research on the role of contractual mechanisms in dealing with interorganizational opportunism.

Esta seção apresenta os principais argumentos que revelam a importância da biodiversidade para a humanidade, tanto aquela domesticada e cultivada, como aquela outra selvagem que se manifesta em habitat terrestres (florestas), aquáticos (mares, lagos e rios) e mixtos (mangues).

Este trabalho toma uma "situação quadro" do tipo: A, ao produzir, danifica B, para mostrar a evolução dos fundamentos da política ambiental, e, com este intento, parte dos primórdios, isto é, do paradigma do Comando e controle, passa pelo enfoque fundado na Economia do bem estar e pela abordagem da Estratégia empresarial fundada na produtividade dos insumos, para chegar a abordagem fundada na Nova economia institucional (NEI) , tanto na sua vertente da Economia dos custos de transação (ECT), como na sua versão da Análise econômica do direito (AED) e conclui, mostrando a necessidade do ajuste da abordagem da NEI as novas exigências imposta pelas novas tecnologias geradoras de externalidades negativas com impactos ambientais planetário e irrerversível.

O trabalho mostra como a construção dos novos bens descomoditizados através dos recursos institucionais configuram estratégias competitivas ancoradas em novas referências teóricas e empíricas. As referências teóricas são associadas a contribuição de Ronald Coase, o pai da Nova Economia Institucional (NEI) que se manifesta, ora como a Economia dos Custos de Transação(ECT), ora como a Análise Econômica do Direito (AED). A referência empírica que, ilustra a institucionalização dos novos mercados descomoditizados são vinculadas a certificação dos produtos, a rotulagem dos processos e a identificação dos lugares. O resultado é um conjunto de estratégias que contempla o interesses empresariais, culturais/identitários e locais, os quais convergem na abertura de novas janelas de oportunidades para todos os envolvidos.

Leveraging a longitudinal dataset concerning 102 inter-firm disputes, we evaluate the effects of contract structure on trust and on the likelihood of continued collaboration. We theoretically refine and empirically extend prior research by (a) distinguishing between control and coordination functions of contracts, (b) separating goodwill-based and competence-based trust, and (c) evaluating the effects of contract structure on relational outcomes in the context of disputes. We find that control provisions increase competence-based trust, but reduce goodwill-based trust, resulting in a net decrease in the likelihood of continued collaboration. Coordination provisions increase competence-based trust, leading to an increased likelihood of continued collaboration.