The Economics of Contracts: A Primer [Hardcover]

Bernard Salanie (Author)

Book Description

ISBN-10: 0262193868 | ISBN-13: 978-0262193863 | Publication Date: March 15, 1997 | Edition: 1st

Although it is one of the major achievements in the history of economic thought, the general equilibrium model is not completely satisfactory as a descriptive tool. In the 1970s several economists settled on a new way to study economic relationships that is often called the "economics of information." The theory of contracts is one of its main building blocks.

The theory of contracts uses partial equilibrium models that take into account the full complexity of strategic interactions between privately informed agents in well-defined institutional settings. The models sum up the constraints imposed by the prevailing institutional setting through a contract, either explicit or implicit. They make intensive use of noncooperative game theory with asymmetric information.

The Economics of Contracts introduces graduate students and nonspecialist professional economists to the theory of contracts. It grew out of a course Professor Salanié gave to third-year Stanford graduate students and third-year students at the Ecole Nationale de la Statistique et de l'Administration Economique. The book focuses on the methods used to analyze the models, but also discusses a few of the many applications the theory has generated in various fields of economics. The author's goal is to give readers the basic tools to create their own applications.

Editorial Reviews

Review

"Students will find this a very useful introduction to the ideas of contract theory. Salanié has managed to summarize a large amount of material in a relatively short number of pages in a highly accessible and readable manner."
—Oliver Hart, Professor of Economics, Harvard University

"The Economics of Contracts offers an excellent introduction to agency models. Written by one of the leading young researchers in contract theory, it is rigorous, clear, concise and up-to-date. Researchers and students who want to learn about the economics of incentives will want to read this primer."
—Jean Tirole, Institut d'Economie Industrielle, Université des Sciences Sociales, France

Language Notes

Text: English (translation)
Original Language: French

See all Editorial Reviews

Product Details

• Hardcover: 232 pages
• Publisher: The MIT Press; 1st edition (March 15, 1997)
• Language: English
• ISBN-10: 0262193868
• ISBN-13: 978-0262193863
• Product Dimensions: 9.1 x 6.1 x 0.8 inches
• Shipping Weight: 1.1 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #1,430,474 in Books (See Top 100 in Books)

Customer Reviews

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), October 28, 1999

By 

Paul Walker - See all my reviews

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, April 24, 2006

By 

T (CA United States) - See all my reviews

Amazon Verified Purchase

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, June 16, 1999

By 

[e-mail] (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