Forward Induction and the Foundations of Incomplete Contracts
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2 Dec 2025
12:45-14:00, Butler Room, Nuffield College
- Economic Theory Lunchtime Workshop Add to Calendar
Speaker: Jim Malcomson and Tom Norman
University of Oxford
We show that forward induction provides a rational foundation for contract renegotiation, and in turn for incomplete contracts and the property rights theory of the firm. However, this foundation places conditions on the contracting game, the violation of which allows ex post inefficiencies of the sort that can explain the internal organization of firms.
The Economic Theory Lunchtime Workshops are convened by Meg Meyer.