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A matter of interpretation: Ambiguous contracts and liquidated damages.

Authors :
Grant, Simon
Kline, J. Jude
Quiggin, John
Source :
Games & Economic Behavior. May2014, Vol. 85, p180-187. 8p.
Publication Year :
2014

Abstract

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. [Copyright &y& Elsevier]

Subjects

Subjects :
*LIQUIDATED damages
*CONTRACTS
*RISK sharing
*ECONOMIC opportunities
*ECONOMIC research
*AMBIGUITY

Details

Language :
English
ISSN :
08998256
Volume :
85
Database :
Academic Search Index
Journal :
Games & Economic Behavior
Publication Type :
Academic Journal
Accession number :
95317642
Full Text :
https://doi.org/10.1016/j.geb.2014.01.019
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