@article {75426,
	title = {More is Less: Why Parties May Deliberately Write Incomplete Contracts},
	journal = {Cambridge Elements in Law, Economics, and Politics 2024},
	year = {Forthcoming},
	month = {2024},
	abstract = {
	Why are contracts incomplete? Transaction costs and bounded rationality cannot be a total explanation since states of the world are often describable, foreseeable, and yet are not mentioned in a contract. Asymmetric information theories also have limitations. We offer an explanation based on {\textquotedblleft}contracts as reference points{\textquotedblright}. Including a contingency of the form, {\textquotedblleft}The buyer will require a good in event E{\textquotedblright}, has a benefit and a cost. The benefit is that if E occurs there is less to argue about; the cost is that the additional reference point provided by the outcome in E can hinder (re)negotiation in states outside E. We show that if parties agree about a reasonable division of surplus, an incomplete contract can be strictly superior to a contingent contract.

},
	author = {Oliver Hart and Maija Halonen-Akatwijuka}
}
