Contractual incompleteness in an extensive-form game under perfect information using Stackelberg model

Authors

  • Anton Abdulbasah Kamil

DOI:

https://doi.org/10.11113/mjfas.v3n2.29

Keywords:

The Augmented model, Contractual commitments, Revenue acceleration, Standard debt contracts, Repeated games,

Abstract

The paper presents the explanation of contractual commitments which are renegotiation-proof, based on “strategic default”. Under this, financial contracts must provide incentives of their own so that the parties would honor the agreement. We investigates the reach of this type of commitment within the general class of extensive form games. The result is that a renegotiation-proof contract exists which commits against every deviation from the equilibrium which would induce a revenue acceleration. AMS Subj. Classification: 91A40, 91A20 .

References

Abreu, D, Econometrica 56 (1988) 383-396.

Aghion, P. & Bolton, P, American Economic Review 77 91987) 488–501.

Benoit, J. P. & Krishna, V, Econometrica 53 (1985) 905-922.

Bensaid, B. & Gary-Bobo, R. J, Econometrica 61 (1993) 1423-1429.

Berglof, E. & Von Thadden, E. L, Quarterly Journal of Economics 109 (1994) 1055-1084.

Blanchard, O. J. Lopes de Silvanes, F. & Sheleifer, A, Journal of Financial Economics 36 (1994) 337-360.

Bolton, P. & Scharfstein, D, American Economic Review 80 (1990) 93 – 106.

Brander, J. A. & Lewis, T.R, American Economic Review 76 (1986) 956-970.

Bulow, J. & Rogoff, K, Journal of Political Economy 97 (1989) 155-178.

Dewatripont, M, Review of Economic Studies 55 (1988) 377-389.

Fershtman, C. & Judd, K, American Economic Review 77 (1987) 927-940.

Hart, O. D. & Moore, J. H, Quarterly Journal of Economics 109 (1994) 841-879.

Hart, O. D. & Moore, J. H, American Economic Review 85 (1995) 567-585.

Jensen, M. C, American Economic Review 76 (1986) 323-329.

Downloads

Published

18-12-2014