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

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