Economic analysis of contract law from information economics’ perspective

Document Type : Research Article

Authors

1 Assistant Prof. Law and Economics, Department of Public Law and Economic Law, Faculty of Law, Shahid Beheshti University, Tehran, Iran

2 MA. in Economic Law, Department of Public Law and Economic Law, Faculty of Law, Shahid Beheshti University, Tehran, Iran

Abstract

Economic analysis of contract law is one of the most extensive interdisciplinary studies between Law and Economics. Theorists of this area analyze the regulations ruling contract law with the help of instructions in economics. Contract theory, as one of the theories in Law and Economics, is rooted in the teachings of “Information Economics”. In fact, imperfect and asymmetric information of the parties of a contract has always been considered as an obstacle to the legal and voluntary exchanges of economic agents in the market. Since in the economic approach, the exchange is an increase in efficiency and social surplus, applying the solutions presented in “Information Economics” can remove these information barriers that stand in the way of the parties of a contract. In this regard, this study has attempted using Microeconomics teachings especially Game Theory and Principal-Agent model to investigate contract parties’ behavior facing information imperfection. Given the application of economic analysis of information in the field of contract law, it seems that the use of Information Economics’ findings by influencing the motivation of the parties to a contract, leads them to reach a common solution to reduce existing information imperfection.

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References

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Private Law
Volume 18, Issue 2
Autumn & Winter
October 2021
Pages 541-560

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