We obtain a recursive formulation for a general class of contracting problems involving incentive constraints. These constraints make the corresponding maximization sup problems non-recursive. Our approach consists of studying a recursive Lagrangian. Under standard general conditions, there is a recursive saddle-point (infsup) functional equation (analogous to a Bellman equation) that characterizes the recursive solution to the planner's problem and forward-looking constraints. Our approach has been applied to a large class of dynamic contractual problems, such as contracts with limited enforcement, optimal policy design with implementability constraints, and dynamic political economy models.
Abstract: The computer language (computer code) on the basis of which smart contracts are written is different from the natural (Human) language. Computer language is a 'dry' language, whereas natural language is 'wet'. In other words, it means that computer language is deterministic (just one meaning and one result are conceivable), when natural language is open to more and potential different meanings. Natural language requires therefore in itself interpretation, at least more than computer language. Computer language in theory doesn't require and possibly doesn't leave room for interpretation. If this assumption is accurate, what are the consequences of it (on the intention of the parties, on contract drafting, on courts' intervention…)? Building on that assumption, this article explores, from a comparative perspective, the impact of the blockchain-based smart contract technology, especially regarding contract drafting techniques. Contract drafting style in common law (long contracts, based on a 'if …, then ….' approach, quite similar to the coding approach) is in part based on the idea of preventing courts' interpretation and intervention. In civil law countries instead, contracts are generally shorter, for several reasons but partly because drafters tend to rely on more general legal concepts, external to the contract, and know that courts will play an important role, through interpretation, in disclosing the 'true meaning' of a contract. Coding contracts and relying on computer-code language can hence have a significant impact on the civil law approach and bring the two legal systems closer as far as contract drafting and contract interpretation are concerned.
The rules presented in this volume of ""Principles of European Law"" deal with service contracts. The economic importance of service contracts within the European Union is enormous. The European Commission recently estimated that services account for some 50% of EU GDP and for some 60% of employment in the Union - though an exact figure is hard to determine given that many services are provided by manufacturers of goods. According to the European Commission, many services appear in official statistics as manufacturing activity, meaning that the role of services in the economy is often sig
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In this paper authors use non-experimental data from government schools in Uttar Pradesh and Madhya Pradesh, two of the largest Indian states, to present average school outcomes by contract status of teachers. The authors find that after controlling for teacher characteristics and school fixed effects, contract teachers are associated with higher effort than civil service teachers with permanent tenures. Higher teacher effort is associated with better student performance after controlling for other school inputs and student characteristics. Given that salaries earned by contract teachers are one fourth or less of civil service teachers, contract teachers may be a more cost-effective resource. However, contracts 'as they are' appear weak. Not only do contract teachers have fairly low average effort in absolute terms, but those who have been on the job for at least one full tenure have lower effort than others who are in the first contract period.
