Unforeseen contingency and renegotiation with asymmetric information
Lee, Jihong (2008) Unforeseen contingency and renegotiation with asymmetric information. Economic Journal 118 (528), pp. 678-694. ISSN 0013-0133.
This article considers a buyer–seller contracting model in which the seller possesses private information about all relevant aspects of the state of nature, including how much each action is worth to the buyer. I argue that, given asymmetric information, the buyer may not entirely dismiss an unforeseen contingency claim by the seller. Then, if the buyer lacks the foresight/awareness to ‘expect the unexpected’, the model admits an equilibrium in which a seemingly complete contract is written and then renegotiated along its outcome path to generate inefficiency ex post.
|School:||Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics|
|Date Deposited:||01 Feb 2011 09:16|
|Last Modified:||11 Oct 2016 11:59|
Additional statistics are available via IRStats2.