On Watson's Non-Forcing Contracts and Renegotiation

Roberto Serrano

No 41, Economics Working Papers from Institute for Advanced Study, School of Social Science

Abstract: Watson (2002) proposes non-forcing contracts as a way to show the limitations of the mechanism design program with ex-post renegotiation (Maskin and Moore (1999)). If one takes a partial implementation approach, as Watson does, we show that non-forcing contracts do not constitute an intermediate paradigm between implementation with no renegotiation and with ex-post renegotiation. Moreover, taking a full implementation 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: C70 D74 K10 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2004-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: On Watson's Non-Forcing Contracts and Renegotiation (2009)
Working Paper: On Watson’s Non-Forcing Contracts and Renegotiation (2009)
Working Paper: On Watsonís Non-Forcing Contracts and Renegotiation (2004)
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