Encyclopedia of Law and Economics
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Encyclopedia of Law and Economics

Edited by Gerrit De Geest

The second, expanded edition of the acclaimed Encyclopedia represents a major update of the most authoritative reference work in the field of law and economics and the nine print volumes are now released online as a single integrated product. The Encyclopedia provides balanced and comprehensive coverage of the major domain in law and economics, including: criminal law, regulation, property law, contract law, tort law, labor and employment law, antitrust law, procedural law, and the production of legal rules. Each theme or volume is overseen by a leading scholar and each of the 156 entries is prepared by an expert in the field, providing an in-depth and authoritative overview of the individual topic, combined with an exhaustive bibliography, allowing users to access and filter the entire corpus of literature in law and economics. As with the print edition, the Encyclopedia is unique in serving both as an entry point and a platform for advanced research. The online edition is enhanced with Elgaronline’s powerful search tools, facilitating the search for key terms across the entire Encyclopedia, whilst the browse function allows users to move seamlessly between the volumes. These elements combine to create a powerful research tool for any researcher or scholar in the field of law and economics.
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Index: Index

[In: Volume 6, Gerrit De Geest (ed) Contract Law and Economics]

  • accident avoidance 426

  • Acemoglu, D. 425

  • action-directing action 62

  • adaptation

  • add-ons 417

  • adhesion contracts see standard form contracts

  • Adler, Barry E. 2312, 236

  • administrative control 285

  • adverse selection 226

  • agency costs and third-party interests 1489

  • agency problems 431

  • Aghion, Phillipe, Mathias Dewatripont and Patrick Rey 291, 293, 295

  • Aghion, Phillipe and Benjamin Hermalin 1967

  • Aghion, Phillipe and Patrick Bolton 1935, 3245

  • Aivazian, Varouj A. 447

  • Aivazian, Varouj A. et al. 73

  • Akerlof, George A. 444

  • Albert, Ross A. 458

  • aleatory view of negotiations 9, 12, 24

  • Allen, D.W. 377

  • allocative efficiency 32, 34, 36, 42, 105, 156

  • Almond 373

  • alternative governance mechanisms 129, 146

  • altruism see bequests, altruistic bequests

  • ambiguity aversion 200

  • anchoring 404

  • Anglo-American theory of contract law 9, 80

  • Anglo-Canadian law 80, 89, 91, 430

  • Anglo-Saxon inheritance 1067

  • annulment of contract 440

  • anticipatory repudiation 171

  • arbitration 129, 146

  • arbitration in franchise agreements 393

  • Arlen, Jennifer 405, 408

  • Arrondel, L. and A. Lafferère 108

  • assets

    • complementary 287

    • specificity 282

    • substitute 287

  • assumpsit 455

  • asymmetric paternalism 411

  • Attorney General v. Blake 466

  • at-will termination 353

  • at-will, franchise 392

  • autonomous adaptation 285286, 288

  • Axiom of Unilateral Action 245248

  • Ayres, I. 197, 363, 371 see Rasmusen, E. and I. Ayres; Ayres, I. and G. Klass

  • Ayres, I. and G. Klass 46

  • Ayres, Ian and Robert Gertner 226228, 232, 235236

  • bailout 2967

  • Baldus photographs case 439

  • bargaining 24950, 448

  • bargaining power 16, 11516

  • bargaining, revolving-offer 2923

  • Bar-Gill, Oren 120, 23031, 41618

  • Bar-Gill, Oren and Omri Ben-Shahar 634, 69, 71

  • barriers to efficient contracts 1567

  • Bartholomew, J. 377

  • Barton, John H. 158

  • Basu, Kaushik 65

  • Bates, T. 389

  • Baumol, W.J. 302

  • Beales, H. 36

  • Beales, J. and T. Muris 351

  • Bebchuk, L.A. and Omri Ben-Shahar 10, 12, 17, 1920, 25, 27

  • Bebchuk, L.A. and R.A. Posner 120

  • Bebchuk, Lucian Ayre and Steven Shavell 226228, 232

  • Becher, Shmuel I. 122

  • p. 472Becker, Gary S. 361

  • Becker, Gerry 41 see legal deterrence, theory of

  • Becker–Barro model 103

  • behavioral approaches to contract law 40121

  • behavioral economics 40121

  • benefit-based liability 465

  • Ben-Shahar, Omri 10, 1819, 25, 40, 131, 144, 426

    • see Bebchuck and Omri Ben-Shahar; Bar-Gill, Oren and Omri Ben-Shahar

  • Ben-Shahar, Omri and J.J. White 121

  • bequests

    • accidental or unplanned bequests 9798, 106

    • altruistic bequests 99100, 106

    • bequests based on pure exchange 1012

    • capitalist or entrepreneurial bequests 1034

    • paternalistic bequests 100101

    • retrospective bequests 101

    • strategic bequests 1023

    • voluntary or planned bequests 98103

  • Brenner, Gabrielle 108

  • Brickley, J.A. 385

  • Brickley, J.A. and F.N. Dark 385

  • Brickley, J.A., F.H. Dark, and M.S. Weisbach 351

  • Brickley, J.A., S. Misra and L. Van Horn 352

  • Bridge, M.G. 430

  • Brinig, M.F. 374, 376

  • Brown, J. 52

  • Brownsword, R. 430

  • Bruce, Christopher 212

  • Buchanan, James and Gordon Tullock 1045

  • Buckley, F.H. 64, 66, 723, 442

  • bundling 417

  • Burrows, Andrew 225

  • buy-backs, for franchise 385, 3889

  • Calabresi, G. 429

  • Calabresi, G. and J.T. Hirschoff 459

  • Calabresi, G. and D. Melamed 363, 429

  • Calabresi, Guido and Douglas A. Melamed 68, 70

  • calculating damages

    • diminished value 170

    • lost surplus 16970

    • opportunity cost 170

    • out-of-pocket cost 170

    • substitute price 169

    • see also reliance; restitution; expectation

  • Camerer, C. 411

  • Campbell, D. and D. Harris 466

  • capital-market 3845

  • Carbone, J.R. and M.F. Brinig 371, 373

  • Carroll Towing 455

  • catchalls 127128, 131

  • cause for entering contract 442

  • Caves, R.E. and W.F. Murphy 384

  • Chandler v. Webster 219

  • characteristics of contracting parties 1434

  • charity 8990

  • p. 473Charpentier, E.M. 42930

  • Che, Y.-K. and D.B. Hausch 244246, 248

  • Che, Yeun-Chu and Chung, Tai-Yeong 189

  • Chiappori, P. 322

  • Chronopost case 444

  • Chu, Cyrus 108

  • Chung, Tai-Yeong 189, 193

  • civil law of contract 42450

  • civil liability 426

  • classic bargain theory 9

  • classic economic theory 432

  • classical theory of contract 61

  • clean break principle 365

  • Coase, R.H. 2834, 328, 336

    • Coase Theorem 161, 432

    • Coasian bargaining 386

    • Coasian solution 466

  • contractual discharge 209, 21214, 21619

  • contractual mistake and misrepresentation 3152

  • Cooper, R. and T.W. Ross 2667

  • cooperation 300, 31415, 33031, 338, 354

  • cooperative equilibrium 331, 342

  • cooperative investment models of holdup problem 2437, 315

  • cooperative investments 18990, 344, 3467

  • cooperative specific investment 346

  • cooperativeness 2212

  • coordinated adaptation 285286, 288

  • Cooter, R. and T. Ulen 345, 5758, 645, 712, 429

  • Cooter, Robert D. and Melvin Aron Eisenberg 169166, 173

  • Cornu, G. 430

  • cost-benefit analysis

    • precontractual investment 1213, 19

  • Cserne, Peter and Szalai, Akos 723

  • Dagan, H., 457, 461

  • Dailami, M. and R. Hauswald 334

  • Dam, K.W. 425

  • damage provisions 180, 182

  • damages limitations 21617

  • damnum absque injuria 455456

  • Darby, M. and E. Karny 256

  • Davis, G., S. Cretney and J. Collins 372

  • Davis, Kevin E. 117

  • Dawson, John P. 60, 340, 456, 464

  • De Geest, Gerrit 109, 429, 443

    • see Bouckaert, Boudewijn and Gerrit De Geest; De Geest, Gerrit and Roger Van den Bergh

  • De Geest, Gerrit and Roger Van den Bergh 58

  • debiasing 417

  • decision-making strategies 4024

  • default preference 405406, 419

  • default rules 428

    • default versus mandatory rules 1357

    • majoritarian 41213

    • non-enforcement 41314

    • tailored 41314

  • defects of consent 434, 441

  • deferred reciprocity 101

  • definiteness 31617, 340

  • Del Granado, J.J. 434

  • Deutch, Sinai 122

  • Dewatripont, M. and E. Maskin 2967

  • Dewatripont, Mathias see Bolton, Patrick and Mathias Dewatripont

  • Dickinson, K. 461

  • Directive on unfair terms 430, 443, 445

  • discount rate 2723

  • disgorgement remedies 464466

  • diversified investments 384

  • divorce 36078

  • Dixit, A.K. 432

  • Dnes, A. 363, 374, 377, 390, 3923

  • Dnes, A. and N. Garoupa 388

  • Dnes, A. and R. Rowthorn 36061

  • Dobbs, D.B. 455

  • double bind effect 76

  • downstream markets 326

  • Draft Common Frame of Reference 437

  • Drahozal, C.R. and K.N. Hylton 393

  • dual distribution 3889

  • duress 5779

    • contract modification 73

    • economic duress 66, 7576

    • engineered vs. non-engineered 66, 68, 71

    • necessity 712

  • EC Directive 274

  • economics of governance 281

  • Edelman, J.J. 464

  • Edlin, A. and B. Hermalin 251

  • Edlin, Aaron S. and Alan Schwartz 162, 179, 188

  • Edlin, Aaron S. and Reichelstein, Stephen 188

  • efficient breaches 455, 466

  • efficient contracts and efficient nonperformance 155156, 185

  • efficient information exchange 11, 234

  • efficient rate of precaution 235

  • Eidenmuller, Horst 59, 62

  • Eisenberg, M. 35, 199, 2345, 414, 4489, 466

  • Ellison, G. 417

  • Emons, W. 266, 268

  • endowment effect 405406, 409

  • English law 430

  • Epstein, Richard A. 74, 407, 454, 456

  • equal division inheritance 10610

  • equilibrium 24850, 253, 267, 299300

  • failure to read 118

  • Farnsworth, E.A. 910, 1213, 24, 26, 370, 466

  • fault divorce 360

  • fiduciary contracts 133, 140

  • Fischhoff, B. 404

  • force majeure 445446

  • foreseeability 22538

  • formalism see textualism

  • formation defences 61, 745

  • formulation error 129

  • Fragonard case 439

  • franchise

    • arbitration 393

    • at-will 392

    • bond 3924

    • buy-backs 385

    • contracts 384395

    • franchising 3513

    • free riding 391

    • hostages 3924

    • inter-satellite transfers 388

    • monitoring 3867

    • resale price maintenance 39091

    • restrictive covenants 393

    • royalties 385

    • search-cost theory 389

    • sunk investments 394

    • switching-cost 391

    • termination provisions 386, 392

    • tie-ins 391

    • vertical restrictions 39091

  • Iacobucci, E. 391

  • imperfect information 64, 67

  • impossibility and impracticability 20724

  • incentive intensity 285, 299

  • incentives

    • communication 2279

    • disclosure and information acquisition 324

    • formation 1634

    • holdup 68

    • incentive-based theories of duress 657

    • incentives to bequests 99100

    • negotiating 12, 2426

    • performance 155

  • Kahneman, D., J.L. Knetsch and R. Thaler 405

  • Kaldor-Hicks efficiency 363, 456, 460

  • Kaldor-Hicks test see allocative efficiency

  • Kambhu, J. 266, 268

  • Kaplow, L. and S. Shavell 289

  • Katz, A. 13, 1516, 26, 117, 141, 143

    • see Hermalin, Benjamin E. et al.

  • La Porta, R. 425

  • Laffont, Jean-Jacques and David Martimort 158

  • Lafontaine, F. 385, 38890

  • Lafontaine, F. and K. Shaw 352, 389

  • Lafontaine, F. and M. Slade 350

  • Landes, W. and R. Posner 4546, 458

  • Lando, H. and C. Rose 450

  • Langevoort, D.C. 401

  • least-cost-avoider 1516, 22

  • Leff, Arthur A. 122

  • legal deterrence, theory of 412

  • lésion 64, 44042

  • Levmore, S. 4579

  • liability, benefit-based 465

  • liability, harm-based 465

  • liability, limitation clauses 443

  • libertarian paternalism 412, 420

  • limitation clause on liability 443

  • linguistic over-determination 289

  • Lipshaw, Jeffrey 130, 139

  • liquidated damages 1667, 178, 41415, 445

  • literalism see texualism

  • Litvinoff, S. 429

  • Loasby, B. 287

  • Long, R.A. 457

  • long-term contracts 208, 210, 21719, 221, 223, 281302, 31454

  • Lyon, T.P. and E. Rasmusen 245248

  • Marotta-Wurgler, Florencia 1212

  • marriage

    • contracts 36078

    • modification of contract 374

    • partnership model 371

    • post-nuptial agreements 375

    • pre-nuptial agreements 375

    • same-sex 377

  • Martimort, David see Laffont, Jean-Jacques and David Martimort

  • Martin, R.E. 3889

  • Marvel, H. 391

  • Maskin, E. and J. Moore 289

  • Maskin, Eric and Jean Tirole 191

  • material adverse change 184

  • Mathewson, G.F. and R.A. Winter 3857

  • Matouschek, N. and I. Rasul 362

  • Mattei, U. 445

  • Maxcy, J.G., R.D. Fort and A.C. Krautmann 324

  • McInnes, M. 464

  • Mechoulan, S. 362

  • Medina, B. see Grosskopf, O. and B. Medina

  • Melamed, Douglas A. see Calabresi, Guido, and Dougas A. Melamed

  • Ménard, C. 283, 2867

  • Miceli, T.J. 374

  • Milhaupt, C.J. and K. Pistor 425

  • Millon, D. 413

  • Mineral Park 208

  • Minkler, A. 389

  • minoritarian default rule 229

  • misperception-based pricing 417

  • misrepresentation 437

    • fraudulent misrepresentation 31, 4146

    • innocent misrepresentation 31, 5052

    • masqueraders 87

    • negligent misrepresentation 31, 4750

    • optimal level of care 4748

    • promissory representations 46

  • Napoleonic inheritance 1067

  • Nash 267, 289, 299

  • need-based remedy for marital breach 3723

  • negative externalities 64

  • negotiorum gestio 456

  • neoclassical economics 282, 284, 287

  • Netherlands Civil Code 445

  • no-fault divorce 360, 3624

  • Nöldeke, G. and K.M. Schmidt 2413, 25051, 294

  • Noll, J. 266

  • nominal consideration 91

  • non-compete 341, 3489

  • non-cooperative game 288

  • non-enforcement default rules 41314

  • non-performance 3413, 445446

  • non-rational behavior 402, 410

  • Norton, S.W. 385

  • no-trade penalty or outcome 191

  • Nozick, Robert 62

  • perfect equilibrium game 292

  • perfect tender rule 1689

  • performance of contract 44550

  • Perloff, Jeffrey M. 212

  • Petty, A.R. 464

  • Pierce, Ellen R. see Graham, Daniel A. and Ellen R. Pierce

  • Pineau, J. 43031

  • plain meaning rule 134, 138

  • Poitevin, M. 325

  • pooling resources 287, 297

  • Popenhoe, D. 377

  • Porat, A. 458

  • Posner, Eric 2289, 233, 415

  • Posner, Richard A. 65, 74, 1334, 140, 20912, 362, 4089, 429, 447, 455, 463, 466

    • see Landes, W. and R. Posner

  • post-nuptial agreements 375

  • Poussin case 4379

  • precontractual liability 928

  • preliminary agreement 1314

  • Prentice, Robert A. 8095

  • pre-nuptial agreements 375

  • price adjustments 21617

  • price reduction warranties 256, 274

  • pricing, multidimensional 418

  • Priest, George L. 168, 265, 428

  • primogeniture 108

  • principal-agent contracts 322

  • prisoner’s dilemma 220, 299300

  • private ordering paradigm 635

  • Probert, R. and J. Miles 361, 376

  • Probst, Thomas 58

  • product complexity models of holdup problem 2437

  • profit-sharing agreements 385, 387

  • promissory estoppel

    • bargaining power 16

    • classic bargain theory 910

    • opportunism deterrence 23

    • optimal damage measure 26

    • protection during negotiations 13, 20

    • trust protection 21

  • Prosser, W. and W. Keeton 459

  • public enforcement of contracts 427

  • public order 428

  • Rachlinsky, J.J. 412, 415

  • Radin, Margaret 76

  • Rasmusen, E. and I. Ayres 389

  • Rasmusen, E. see Rasmusen, E. and I. Ayres

  • Rasmusen, E.B., J.M. Ramseyer and J.S. Wiley Jr. 325

  • rational choice theory 4012, 407408

  • redistributive equity 105

  • refinance 296298

  • regret contingency 155156

  • relational contracting 289, 295, 299300, 314

  • relation-specific investments 12, 14, 20, 22

  • reliance 10, 1567, 15964, 16870, 455

    • bargaining power and timing 15

    • bilateral reliance 17

    • fraudulent misrepresentation 445

    • gift promises inducing reliance 89

    • liability regimes 1718

    • p. 480optimal investments 13

    • precontractual reliance 1113

    • unilateral reliance 1416

    • see optimal damage measure

  • Saiman, C. 457

  • same-sex marriage 377

  • Samuelson, W. and R. Zeckerhauser 405

  • sanctions 155

  • satisficing 403

  • Savage, L.J. 282, 301

  • Schmitz, Patrick W. 19091

  • Schwartz, A. and R.E. Scott 10, 13, 14, 25, 27, 128, 134, 136, 1425, 340

  • Schwartz, Alan 74, 1845

    • see Schwartz, A. and R.E. Scott; Edlin, Aaron S. and Alan Schwartz

  • Schwartz, Alan and Louis L. Wilde 11819

  • Schweizer, Urs 1623

  • Scott, E.S. and R.E. Scott 375

  • Scott, R.E. 10, 21920, 339

    • see Schwartz, A. and R.E. Scott; Goetz, C.J. and R.E Scott.

  • Scott, Robert E. and George G. Triantis 15960

  • screening mechanisms 297

  • seal 91

  • search properties 256

  • search-cost theory, of franchise 389

  • Segal, I. 2445, 247248

  • Segal, I. and M.D. Whinston 325

  • selfish investments 3445

  • Selten, R. 292

  • sequential contracting behavior 121

  • sequential investment 25051

  • Shaked, A. and J. Sutton 246248, 250, 252

  • Shavell, Steven 49, 6566, 689, 712, 127, 156, 158, 162, 175, 345

  • Shell, R.G. 10, 212

  • Sherwin, E. 461

  • shirking 385, 431

  • short-term contracts 31623

  • shrouded attributes 417

  • signaling equilibrium 197198

  • Silver, C. 456

  • Simon, Herbert 217, 402

  • simultaneous investment 250

  • Singer, J. 371

  • Slovic and Lichtenstein 404

  • Smith, V. 361

  • Smith, J. and R. Smith 39

  • p. 481Smith, Lionel 461

  • Smythe, Donald J. 20724

  • social welfare 29091, 294, 299300

  • soft-budget constraint syndrome 289, 295298

  • Sovern, J. 419

  • specific investments 314, 318, 32633, 3367, 343348

  • specific performance 164166, 239, 294, 342, 348, 44850

  • Spence, M. 259, 262

  • Spitzer, M. and E. Hoffman 407

  • standard form contracts 11524

  • status-quo bias 405406, 413, 419

  • Statute of Frauds 463

  • Step-Saver Data Systems, Inc. v. Wyse Technology 118

  • Stewart, Hamish 61, 63, 67

  • stickiness 2323

  • Stigler, G. 42

  • stipulated damages 180, 1824, 186, 189, 1945, 198202

  • stochastic damages 2312

  • Stole, Lars A. 1845

  • Stolle, Dennis P. and A.J. Slain 118

  • subjective good faith 430

  • subsequent improvement warranties 256, 274

  • substitute assets 287

  • Suez Canal cases 213, 219

  • sunk cost effect 418

  • sunk investments, of franchise 394

  • Sunstein, C.R. 401, 410

  • Sunstein, C.R. and R.H. Thaler 412, 41920

  • superior risk bearer 131, 1379, 142

  • suppletive law 428, 446

  • switching-cost, of franchise 391

  • Sykes, Alan O. 21314

  • Szalai, Akos see Cserne, Péter and Szalai, Akos

  • tailored default rules 226, 41314

  • taxing bequests see estate tax

  • Taylor v. Caldwell 207

  • Taylor, James Stacey 63

  • termination at will 353

  • termination provisions, of franchise 386, 392

  • Tesler, L. 391

  • textualism 128, 131, 133, 136, 1429, 434

  • Thaler, R. 405406, 418

  • Thompson, R.S. 3889

  • threat of violence or fear 440

  • tie-ins, franchise 391

  • timing of foreseeability determination 2345

  • Tirole, J. 295

  • Tomes, Nigel 107108

  • total and partial breach 167

  • trading opportunity 2469, 2523

  • transaction cost theory 11516, 282, 287, 33031, 350, 3845, 392

  • transferable control 295

  • Trebilcock, Michael 366, 429

  • Trebilcock, Michael J. 634, 67, 76

    • see Aivazian, Varouj A. et al. 73

  • Triantis, George G. 73, 21416 see also Scott, Robert E. and George G. Triantis

  • Trimarchi, Pietro 21617

  • Tullock, Gordon see Buchanan, James and Gordon Tullock

  • Tversky, A. and D. Kahneman 404, 406

  • typology of default rules 229

  • UCC Article 2 93, 17980, 208

  • Ulen, T. 408 see also Cooter, R. and T. Ulen

  • unconscionability 60, 64, 74, 417, 430

  • underinvestment 2945, 323

  • undue influence 5861

  • unforeseeability 4467

  • Unidroit Principles of International Commercial Contracts 430

  • Uniform Written Obligations Act 91

  • unjust enrichment 439, 45467

  • unverifiable information 1814, 186188, 190, 192

  • use-pattern mistakes 418

  • valuation 290

  • van Wijck, Peter 22538

  • verifiability of non-performance 3413

  • vertical disintegration 330

  • vertical integration 3289, 350

  • vertical restrictions to franchising 39091

  • p. 482Vienna Sales Convention 430

  • volition, theory of 57

  • voluntariness 5758, 612, 64, 67, 7071, 745

  • Von Neumann, J. and O. Morgenstern 282

  • von Thadden, E. 298

  • Zervogianni, Eleni see Hatzis, Aristides N. and Eleni Zervogianni

  • Zhou, Q. 323, 36, 38, 41, 4346, 3152

  • Zimmerman, R. 433