The theory of contracts grew out of the failure of the general equilibrium model to account for the strategic interactions among agents that arise from informational asymmetries. This popular text, revised and updated throughout for the second edition, serves as a concise and rigorous introduction to the theory of contracts for graduate students and professional economists. The book presents the main models of the theory of contracts, particularly the basic models of adverse selection, signaling, and moral hazard. It emphasizes the methods used to analyze the models, but also includes brief introductions to many of the applications in different fields of economics. The goal is to give readers the tools to understand the basic models and create their own.For the second edition, major changes have been made to chapter 3, on examples and extensions for the adverse selection model, which now includes more thorough discussions of multiprincipals, collusion, and multidimensional adverse selection, and to chapter 5, on moral hazard, with the limited liability model, career concerns, and common agency added to its topics. Two chapters have been completely rewritten: chapter 7, on the theory of incomplete contracts, and chapter 8, on the empirical literature in the theory of contracts. An appendix presents concepts of noncooperative game theory to supplement chapters 4 and 6. Exercises follow chapters 2 through 5.
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"Salanié provides a broad overview of the economics of contracts. Concision and clarity make the book an elegant introduction to the subject for newcomers. But it is also a useful reference for experienced students and researchers."--Roger Guesnerie, Collège de France
"Salanié has written an elegant book, concise in its explanations and tightly focused on the most useful models and results of contract theory. His experience in both theory building and theory testing are plain to see in his sure-handed choices, which separate the chaff from the wheat in this huge and growing body of theory. I recommend this book highly to students and newcomers to the economic theory of contracts."--Paul Milgrom, Professor of Economics, Stanford University
"The first edition of Salanié's book provided an insightful introduction to the modern economics of incentives and contracts. This second edition keeps up with recent advances while maintaining the emphasis on key ideas and intuitions. A great read."--Patrick Rey, IDEI, University of Toulouse
Language Notes
Original Language: French --This text refers to an out of print or unavailable edition of this title.
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Most Helpful Customer Reviews
30 of 31 people found the following review helpful:
4.0 out of 5 stars
A good book (with some minor problems),
This review is from: The Economics of Contracts: A Primer (Hardcover)
Salanie's book covers the standard areas of contract theory; adverse selection, moral hazard, signalling etc, along with chapters on the dynamics of complete contracts, incomplete contracts and a final chapter on the empirical work on contracts. The material on dynamics and incomplete contracts is most welcome as many other books in this area do not cover it. Perhaps more space could have been given over to incomplete contracts given the increasing importance of them. The book manages to cover a large amount of material in a relatively small number of pages, it is just over 200 pages. Most of this material is presented in an accessible and readable manner and most graduate students in economics should be able to read the book. The most obvious problem with the book is the number of small errors it contains. Some of the figures have points that are in the wrong place; there are a number of what look like typos in the text, being told that an indifference curve goes through a point (q2,t2) when in fact it goes through (q1,t1) for example. While these are only minor problems they do distract from the otherwise good impression that the book makes.
6 of 6 people found the following review helpful:
3.0 out of 5 stars
Broad introduction with a lack of depth,
By T (CA United States) - See all my reviews
Amazon Verified Purchase(What's this?)
This review is from: The Economics of Contracts: A Primer (Hardcover)
...so if that's what you want, then this book is for you. However, if you're using this for your first look at contract theory, you may well be disappointed (as I am). I don't credit Salanie for leaving out the technical details of the models, because he doesn't effectively convey the depth of the models in his largely intuitive treatment. I'm all for intuition and simplicity, but his book leaves me with more questions than answers after reading it.I'm browsing around on Amazon for a better book, so I thought I'd write a quick rating so that other lowly beginners like me don't make the same mistake I made in purchasing this as my only textbook. On the other hand, I suppose if you want a concise overview with the sketch of most of the important contract theory models, then this might be what you're looking for.
6 of 20 people found the following review helpful:
5.0 out of 5 stars
best book ever,
By iggarcia@colossus.rhon.itam.mx (Mexico City) - See all my reviews
This review is from: The Economics of Contracts: A Primer (Hardcover)
I loved that book because it explains the theory of contracts in an easy way buy with no lack of formality
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