Transaction costs economics; Contract theory
9 important questions on Transaction costs economics; Contract theory
What are the four levels in the transaction costs theory?
- Embeddedness: this is the level of social embeddedness, norms traditions are located here. This level is taken as given. They are operating since a long time. Very long time for changing, f.e. Traditions, norms, religions.
- institutional environment: formal rules of the game. Property rights, bureaucratic. Different levels of government. In this level the roots of the game are created. You can see that the frequency in which the institutional development is much less, they change in a certain range of time.
- Governance: institutions of government. Contracts. Listening and obeing to the former rules.
- Resource allocation.
What are the two contract theories?
- Agency theory; tries to understand how incorporate the right incentive into an contract. So we can prevent an opportunistic behaviour.
- Implicit contract theory; informal contract,. Voluntary agreements that last for a long time between parties on the future exchange of goods and services. Trust is very important as well. Self-enforcing, still ways to reach the agreement.
What are the four main elements of the contract?
- Identify contracting parties
- Specify required actions and conditions
- Specify payment
- Specify how 'disputes' will be resolved, or how 'contract breach' will be penalised.
- Higher grades + faster learning
- Never study anything twice
- 100% sure, 100% understanding
For my 1st exam I got a C. Then, I started looking for ways to learn better and I came across Study Smart. Since then I have scored a A+, A, A- and another A. I highly recommend it to everyone who wants to hear it. I am so happy with it!!
I was struggling to finish all my first-year subjects for 3 years. Then I discovered Study Smart, which helped me to finish all of them within 3 months.
Because of StudySmart, things are going well in many ways. Before, I always had study stress and no time for anything. Now I feel calm and confident (because of the program). I used to score a B, now I usually score an A or A+.
Hey Chris, I really want to thank you very much for developing the platform, I usually got around C for my exams, now I scored an A+, an A and a A- !!
Since using Study Smart, my average has increased significantly. I even completed a statistics course with a A+ while I'm bad at statistics. I took on extra courses this year, because of Study Smart. Thanks so much!
Ever since I started studying with StudySmart I passed all my exams !!! No more re-sits!! At first, I was happy with a pass and now I only get good grades. Many thanks!
I aced all the courses I studied with Study Smart. For law, I first scored a D, and now an A! I’m 100% sure that I’ll pass all the courses I study with Study Smart.
I always thought I studied well. My grades were fine. I could never have imagined that applying these study skills would have such a huge and direct impact on my grades, my speed and the pleasure I have in learning.
For the first time, I finally feel totally confident about the way I learn. I have the perfect overview and make great progress in terms of speed and the grades I get. Thanks, Chris!
I immediately started to enjoy learning again, and my grades soared. All of a sudden, everything went better. I highly recommend Study Smart to all students..
Being able to create my materials online made the process of studying so much smoother and quicker. I no longer have to spend a huge amount of my time on creating my summaries.
At first, my notes were a mess. Now I use Study Smart to take my notes in a perfectly structured way. It helps me to save a lot of time and do other things I enjoy.
Students that study with Study Smart get better grades. The system applies all the learning methods in such a way that both well-performing students and students who struggle perform much better.
Hi Chris, I would like to thank you very much. Last year I scored C on a course, and this year I got an A+ thanks to your method! Thank you very much!
The largest effect is that my child is more enthusiastic about school! Every parent wants their children to be happy at school, Study Smart made it happen.
In high school, I failed several exams, and that has really changed now. I actually needed this tool very much back then. Since I started studying with StudySmart, I haven't had any D's. My average score is now an A and those are results I would have never had in the past
With my old method, I passed only 3 out of 8 courses. Since I started taking my notes digitally in Study Smart, I have passed all my courses on the first try. For me, StudySmart takes away the stress of wondering if I will pass or not.
Thanks to StudySmart, I passed all my exams, and with better grades than before! On top of that, I have mastered a very good study method now, which I am confident will help me earn my degree.
What can you say about the 'completeness' of the contract?
- In which contracts do you observe incompleteness? Either the payment conditions are missing, or there is no indication of how to form disputes.
- Why are contract incomplete? Not speficy what needs to be done in every contingency.
What is contract incompleteness?
- The use of implicit / self-enforcing / relational / informal contracts.
- These are contracts that cannot be enforces (by third parties / the law) and therefore have to be self-enforcing.
What are the four self-enforcing mechanisms in the implicit contract theory?
- Reputation
- Tit for tat
- Third party arbitrators
- Mutual commitment
What is tit for tat (- repeated games)?
- Actors in a transaction decide on their strategy based on the behaviour of the other actor in the previous period. Cooperation leads to cooperation, non-cooperation is followed by non-cooperation. Especially in relationships with high mutual dependence, the tit for tat strategy leads to self-enforcement.
What is the third party arbitrator?
What are the five characteristics of mutual commitment?
- Increase mutual dependence
- strong credible commitments
- use of ''hostages''.Hostages = down-payment that is forfeietd in case not all obligations are met (deposit for renting an apartment)
- Examples: case-study credible commitments in agri-food.
Try our study magic for free
a PDF, study it super fast
- No sign up, email or credit card needed!
- AI makes unlimited flashcards
- Get unlimited quizzes and tests
- Ask AI anything
- No sign up, email or credit card needed!
- Have and keep perfect overview
- Make flashcards, notes and mind maps
- Review, test and score!
The question on the page originate from the summary of the following study material:
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding
