Evolution of Contracts and Institutional Change

Author: Chen Guofu
Publisher:
Publish Date: 2002-10-01
Features: This book summarizes the general principles that should be followed in contract arrangements and elaborates on the role of the formal requirements of contracts as well as the idea of using contracts to govern contracts. Without information issues, a contract is merely an empty theoretical abstraction. Modern contract theory is the study of how to allocate rights, responsibilities, and risks under conditions of incomplete and asymmetric information in the economy. Before the 1970s, contract theory was basically still divided between the fields of law and political science. In the field of law, contract theory has a long history, exploring the relationship between transactions and contracts as well as the issue of contract performance. In the field of political science, contract theory was established only in the 17th century, exploring the relationship between contracts and social institutions, aiming to bring the power of the monarch under the constraints of the social contract and establishing a theoretical foundation for institutional change.