A matter of interpretation: ambiguous contracts and liquidated damages

Grant, Simon, Kline, J. Jude and Quiggin, John (2014) A matter of interpretation: ambiguous contracts and liquidated damages. Games and Economic Behavior, 85 1: 180-187. doi:10.1016/j.geb.2014.01.019


Author Grant, Simon
Kline, J. Jude
Quiggin, John
Title A matter of interpretation: ambiguous contracts and liquidated damages
Journal name Games and Economic Behavior   Check publisher's open access policy
ISSN 0899-8256
1090-2473
Publication date 2014-05
Sub-type Article (original research)
DOI 10.1016/j.geb.2014.01.019
Open Access Status DOI
Volume 85
Issue 1
Start page 180
End page 187
Total pages 8
Place of publication Maryland Heights, MO, United States
Publisher Academic Press
Collection year 2015
Language eng
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.
Keyword Ambiguity
Bounded rationality
Expected uncertain utility
Incomplete contracts
Liquidated damages
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2015 Collection
School of Economics Publications
 
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