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| Roberto Serrano |
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| ''On Watson's Non-Forcing Contracts and Renegotiation'' |
| ( 2009, Vol. 29 No.3 ) |
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| 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.
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| Keywords: contracts, renegotiation, mechanism design |
JEL:
D7 - Analysis of Collective Decision-Making: General |
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| Manuscript Received : Jul 31 2009 | | Manuscript Accepted : Sep 18 2009 |
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