Default rules and equilibrium selection of contract terms

Morten Hviid

doi:10.1016/0144-8188(95)00023-2

Default rules and equilibrium selection of contract terms

Morten Hviid

Research output: Contribution to journal › Article

2 Citations (Scopus)

Abstract

The paper analyses the effect of default rules on the selection of contract terms given asymmetric information. It is shown that even when costs of contracting around the default are zero, the form of the default rule may matter because it may serve as a means for selection between multiple equilibria. The result is illustrated in a simple signalling game.

Original language	English
Pages (from-to)	233-245
Number of pages	13
Journal	International Review of Law and Economics
Volume	16
Issue number	2
DOIs	https://doi.org/10.1016/0144-8188(95)00023-2
Publication status	Published - Jun 1996

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10.1016/0144-8188(95)00023-2

Cite this

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title = "Default rules and equilibrium selection of contract terms",

abstract = "The paper analyses the effect of default rules on the selection of contract terms given asymmetric information. It is shown that even when costs of contracting around the default are zero, the form of the default rule may matter because it may serve as a means for selection between multiple equilibria. The result is illustrated in a simple signalling game.",

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AB - The paper analyses the effect of default rules on the selection of contract terms given asymmetric information. It is shown that even when costs of contracting around the default are zero, the form of the default rule may matter because it may serve as a means for selection between multiple equilibria. The result is illustrated in a simple signalling game.

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DO - 10.1016/0144-8188(95)00023-2

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