Logo
EnglishCookie löschen - von nun an wird die Spracheinstellung Ihres Browsers verwendet.
Herweg, Fabian; Schmidt, Klaus M. (Oktober 2012): A Theory of Ex Post Inefficient Renegotiation. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2012-26

Dies ist die neueste Version des Dokumentes.

[img]
Vorschau

PDF

343kB

Abstract

We propose a theory of ex post inefficient renegotiation that is based on loss aversion. When two parties write a long-term contract that has to be renegotiated after the realization of the state of the world, they take the initial contract as a reference point to which they compare gains and losses of the renegotiated transaction. We show that loss aversion makes the renegotiated outcome sticky and materially inefficient. The theory has important implications for the optimal design of long-term contracts. First, it explains why parties often abstain from writing a beneficial long-term contract or why some contracts specify transactions that are never ex post efficient. Second, it shows under what conditions parties should rely on the allocation of ownership rights to protect relationshipspecific investments rather than writing a specific performance contract. Third, it shows that employment contracts can be strictly optimal even if parties are free to renegotiate.

Alle Versionen dieses Dokumentes