On Randomization in Coalition Contracts

Patrick Schmitz

MPRA Paper from University Library of Munich, Germany

Abstract: This article analyzes a much debated clause in the 1996 coalition contract between SPD and F.D.P. in Rheinland-Pfalz. Two parties write a contract, based on which decisions under incomplete information have to be made at a later point in time. It is shown that a complex complete contract can achieve the first best outcome. However, a simple incomplete contract can implement the first best outcome only if use of seemingly inefficient randomization is made.

Keywords: incomplete contracts; asymmetric information; coalitions; renegotiation (search for similar items in EconPapers)
JEL-codes: D72 D86 (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Randomization in Coalition Contracts (1998)
Journal Article: Randomization in coalition contracts (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13446

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