On Watson's Non-Forcing Contracts and Renegotiation

Roberto Serrano

Economics Bulletin, 2009, vol. 29, issue 3, 2350-2360

Abstract: Watson (2007) proposes non-forcing contracts as a way to show the limitations of the mechanism design program with ex-post renegotia- tion (Maskin and Moore (1999)). If one takes a partial implementation approach, as Watson does, we show that non-forcing contracts do not con- stitute an intermediate paradigm between implementation with no renego- tiation and with ex-post renegotiation. Moreover, taking a full implemen- tation approach, non-forcing contracts fail if and only if one goes outside of the constraints identified by Maskin and Moore, because of the appearance of undesirable equilibria.

Keywords: contracts; renegotiation; mechanism design (search for similar items in EconPapers)
JEL-codes: C7 D7 (search for similar items in EconPapers)
Date: 2009-09-18
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Related works:
Working Paper: On Watson’s Non-Forcing Contracts and Renegotiation (2009)
Working Paper: On Watson's Non-Forcing Contracts and Renegotiation (2004)
Working Paper: On Watsonís Non-Forcing Contracts and Renegotiation (2004)
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