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Handbook of New Institutional Economics pp 175–203Cite as

The Many Legal Institutions that Support Contractual Commitments

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The problem of enforcing agreements in exchange is at the heart of economic life and has been a central topic for economic theory in the past several decades. As economists have focused more closely on what goes on inside the ‘black box’ of the firm, especially under conditions of uncertainty and asymmetric information, the role of contractual commitment in economic organization has come to the fore. Much of the theory of incentives that has emerged since the 1970s depends crucially on assumptions about the enforceability of contractual mechanisms designed to align the interests of principal and agent and achieve efficient production and exchange (Laffont and Martimort 2002).

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Author information

Authors and Affiliations

  1. Center for Law, Economics and Organization, University of Southern California, USA

    Gillian K. Hadfield

Authors
  1. Gillian K. Hadfield
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Editor information

Editors and Affiliations

  1. Université de Paris, 106 Bd de l’Hôpital, 75647, Paris, France

    Claude Ménard

  2. The Ronald Coase Institute, 5610 Wisconsin Ave, 20815, Chevy Chase, MD, USA

    Mary M. Shirley

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Hadfield, G.K. (2008). The Many Legal Institutions that Support Contractual Commitments. In: Ménard, C., Shirley, M.M. (eds) Handbook of New Institutional Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-69305-5_9

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