Three essays on contracts /
The first essay provides an empirical test of the theory of
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| Format: | Thesis Book |
| Language: | English |
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[Place of publication not identified] :
[publisher not identified] ;
1994.
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| Subjects: | |
| Online Access: | http://proxy.library.tamu.edu/login?url=http://proquest.umi.com/pqdweb?did=741944881&sid=1&Fmt=2&clientId=2945&RQT=309&VName=PQD |
| Summary: | The first essay provides an empirical test of the theory of information cascades as developed by Bikhchandani, Hirshleifer, and Welch (1992). The essay investigates how well information cascades theory describes the diffusion process of price adjustment clauses in wellhead natural gas contracts, and contributes to our understanding of the factors affecting the incompleteness of contracts by showing how information cascades affect the set of clauses included in these contracts. The test results suggest, that information cascades explain quite accurately the diffusion process of price adjustment clauses in these contracts. Agents tend to conform to previous contracting decisions, especially if those decisions were made by themselves, by others on the same field, or under similar well and regulatory conditions. Furthermore, the study shows that breaks in information regimes occur regarding the value of clauses, where agents significantly discount all information prior to the break. These breaks help explain why we see sudden shifts in contracting conventions. To determine the optimal degree of contract complexity the second essay models explicitly costs of covering contingencies, breach, and renegotiation. Analysis of the evolution in price adjustment mechanisms in natural gas wellhead contracts provides support for the model predictions that contingencies are more likely to be covered the higher the probability that they occur, and the lower the transaction costs involved with designing, negotiating, and executing clauses in which they are covered. and signalling influence principals' choices of ownership structure when hiring agents. Joint ownership contracts require high ex ante transaction costs and low ex post enforcement costs because they transfer ownership and control rights. Because standard contracts do not cover ownership transfers they have low ex ante transaction costs, but high expected enforcement costs ex post. Under complete infon-nation principals choose contracts that minimize expected transaction costs. When principals' types are private information, however, good type principals may offer contracts with the higher expected transaction costs for bad principals, if they can thus signal agents their type and reduce expected agent compensation. |
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| Item Description: | Vita. "Major Subject: Economics". |
| Physical Description: | x, 113 leaves : illustrations ; 28 cm. Issued also on microfiche from University Microfilms Inc. |
| Bibliography: | Includes bibliographical references. |