# kaal:claim:2267560-033

**Claim.** Opportunistic behavior, transaction costs, and bounded rationality undermine comprehensive contracting, so contracting parties do not specify all of their respective obligations ex-ante because anticipating all contingencies is too costly.

**Type.** failure  **Support.** argued

**Source quote.**

> Because it is too costly for contracting parties to anticipate all contingencies and to agree to necessary contract adaptations in advance (Williamson 1985), the contracting parties in the incomplete contract model do not specify all of their respective obligations under the contract ex-ante.

**From.** Wulf A. Kaal, *Evolution of Law Dynamic Regulation in a New Institutional Economics Framework* (2013), IV. Dynamic Regulation in the Incomplete Contract Model, page 10

**Cite as.** Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560

**Verify.** sha256 of source PDF `7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202013%20-%20Evolution%20of%20Law%20Dynamic%20Regulation%20in%20a%20New%20Institutional%20Economics%20Framework.pdf

**Failure mode.** failure of comprehensive contracting  (family: agency-cost-and-managerial-opportunism)

**Topics.** economics, risk-and-incentives

**Keywords.** incomplete-contracts, transaction-costs, opportunism, bounded-rationality

**Related claims.**

- generalizes: https://wulfkaal.github.io/claims/2992962-030
- extended_by: https://wulfkaal.github.io/claims/5886442-016
- generalizes: https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-005

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