Universität zu Köln

Bigoni, Maria ORCID: 0000-0001-5988-6115, Bortolotti, Stefania ORCID: 0000-0002-8326-5447, Parisi, Francesco and Porat, Ariel ORCID: 0000-0002-3492-694X (2017). Unbundling Efficient Breach: An Experiment. J. Empir Leg. Stud, 14 (3). S. 527 - 548. HOBOKEN: WILEY. ISSN 1740-1461

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Abstract

Current law and economics scholarship analyzes efficient breach cases monolithically. The standard analysis holds that breach is efficient when performance of a contract generates a negative total surplus for the parties. However, by simplistically grouping efficient breach cases as of a single kind, the prior literature overlooks that gain-seeking breaches might be different from loss-avoiding breaches. To capture these different motives, we designed a novel game called the Contract-Breach Game where we exogenously varied the reasons for the breachpursuing a gain or avoiding a lossunder a specific performance remedy. Results from an incentivized laboratory experiment indicate that the motives behind the breach induce sizable differences in behavior; subjects are less willing to renegotiate when facing gain-seeking than loss-avoiding breaches, and the compensation premium obtained by the promisee is higher. Our analysis suggests that inequality aversion is an important driver of our results; indeed, inequality-averse subjects accept low offers more often in cases of loss-avoiding breaches than gain-seeking breaches. These results give us insight into the preferences and expectations of ordinary people in a case of a breach.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Bigoni, Maria UNSPECIFIED orcid.org/0000-0001-5988-6115 UNSPECIFIED Bortolotti, Stefania UNSPECIFIED orcid.org/0000-0002-8326-5447 UNSPECIFIED Parisi, Francesco UNSPECIFIED UNSPECIFIED UNSPECIFIED Porat, Ariel UNSPECIFIED orcid.org/0000-0002-3492-694X UNSPECIFIED
URN:	urn:nbn:de:hbz:38-221115
DOI:	10.1111/jels.12154
Journal or Publication Title:	J. Empir Leg. Stud
Volume:	14
Number:	3
Page Range:	S. 527 - 548
Date:	2017
Publisher:	WILEY
Place of Publication:	HOBOKEN
ISSN:	1740-1461
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language CONTRACT; COMPETITION Multiple languages Law Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/22111