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    Unforeseen contingency and renegotiation with asymmetric information

    Lee, Jihong (2007) Unforeseen contingency and renegotiation with asymmetric information. Working Paper. Birkbeck, University of London, London, UK.

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    This paper 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. We 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.


    Item Type: Monograph (Working Paper)
    Additional Information: BWPEF 07107
    School: Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School
    Depositing User: Administrator
    Date Deposited: 26 Mar 2019 14:59
    Last Modified: 02 Aug 2023 17:50


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