Optimal dynamic contracting, enforcement, and ambiguity (B02)

• Subject Area: Economic Theory
• Term: since 2017
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 280092119

Many economic transactions are governed by long-term contractual relationships. In the first funding period, we focused on the methodological foundations of dynamic contracting and selected applications. This raised two important issues that we plan to study in more detail in the second funding phase: enforceability and ambiguity. A lack of enforceability and issues of ambiguity both undermine the trust of contracting parties in a contract and therefore negates the contract’s ultimate purpose of providing incentives. Such problems are especially severe for long-term contractual relationships in, for instance, financial and labor markets.

• DFG Programme: CRC/Transregios
• Subproject of: TRR 190: Rationality and Competition: The Economic Performance of Individuals and Firms
• Applicant Institution: Humboldt-Universität zu Berlin
• Project Heads: Professor Dr. Ulrich Horst; Professor Dr. Matthias Lang; Professor Dr. Roland Strausz