Article ID Journal Published Year Pages File Type
5071929 Games and Economic Behavior 2014 8 Pages PDF
Abstract
We consider the optimality of liquidated damages contracts in a setting of contractual ambiguity and potential for disputes. We show that when parties are ambiguity averse enough, they will optimally choose liquidated damages contracts and sacrifice risk sharing opportunities.
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Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Preview
A matter of interpretation: Ambiguous contracts and liquidated damages
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