{"product_id":"more-is-less","title":"More is Less","description":"\u003cp\u003eWhy are contracts incomplete? Transaction costs and bounded rationality cannot be a total explanation since states of the world are often describable, foreseeable, and yet are not mentioned in a contract. Asymmetric information theories also have limitations. We offer an explanation based on 'contracts as reference points'. Including a contingency of the form, 'The buyer will require a good in event E', has a benefit and a cost. The benefit is that if E occurs there is less to argue about; the cost is that the additional reference point provided by the outcome in E can hinder (re)negotiation in states outside E. We show that if parties agree about a reasonable division of surplus, an incomplete contract is strictly superior to a contingent contract. If parties have different views about the division of surplus, an incomplete contract can be superior if including a contingency would lead to divergent reference points.\u003c\/p\u003e","brand":"Cambridge University Press Bookshop","offers":[{"title":"Default Title","offer_id":56668803760514,"sku":"9781009396073","price":18.0,"currency_code":"GBP","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0475\/2031\/7597\/files\/9781009396073i.jpg?v=1779632701","url":"https:\/\/www.cambridgebookshop.co.uk\/products\/more-is-less","provider":"Cambridge University Press Bookshop","version":"1.0","type":"link"}