Behavioral Contract Theory

Botond Koszegi

Journal of Economic Literature, 2014, vol. 52, issue 4, 1075-1118

Abstract: This review provides a critical survey of psychology-and-economics ("behavioral-economics") research in contract theory. First, I introduce the theories of individual decision making most frequently used in behavioral contract theory, and formally illustrate some of their implications in contracting settings. Second, I provide a more comprehensive (but informal) survey of the psychology-and-economics work on classical contract-theoretic topics: moral hazard, screening, mechanism design, and incomplete contracts. I also summarize research on a new topic spawned by psychology and economics, exploitative contracting, that studies contracts designed primarily to take advantage of agent mistakes. (JEL A12, D03, D82, D86)

JEL-codes: A12 D03 D82 D86 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/jel.52.4.1075
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Citations: View citations in EconPapers (82)

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