%0 Journal Article
%T Contract and Game Theory: Basic Concepts for Settings with Finite Horizons
%A Joel Watson
%J Games
%D 2013
%I MDPI AG
%R 10.3390/g4030457
%X This paper examines a general model of contract in multi-period settings with both external and self-enforcement. In the model, players alternately engage in contract negotiation and take individual actions. A notion of contractual equilibrium, which combines a bargaining solution and individual incentive constraints, is proposed and analyzed. The modeling framework helps identify the relation between the manner in which players negotiate and the outcome of the long-term contractual relationship. In particular, the model shows the importance of accounting for the self-enforced component of contract in the negotiation process. Examples and guidance for applications are provided, along with existence results and a result on a monotone relation between ˇ°activeness of contractingˇ± and contractual equilibrium values.
%K external enforcement
%K self-enforcement
%K negotiation
%K agreements
%K contractual equilibrium
%U http://www.mdpi.com/2073-4336/4/3/457