» Contract Theory

Contract Theory Reviews

Customer Rating:
Summary: It's a good book!
Comment: This book is strongly recommended by our professor. I read some chapters and find it very clear. It does not over-use math, but empahsize the intuition of contract theory.

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Customer Rating:
Summary: Excellent style
Comment: The authors arrange every detail of the subject logically and beautifully, great book to read and own.

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Customer Rating:
Summary: Comprehensive and well-writen
Comment: Probably the best book on Contract Theory I know. Very rigorous but with the posibility of a second non-mathematical reading. The conceptualization of most examples and motivations in terms of buyer-seller limits the scope to economists.
The book deeply analyzes topics usually casted aside by another handbooks.

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Customer Rating:
Summary: Exceptional
Comment: Despite more than 20 years of research there are not many books out there on contract theory. Laffont & Martimort and Salanie are perhaps the most widely read ones. What distinguishes this book from others is its comprehence coverage of modern contract theory: unlike the others, it allocates sizable portions on multilateral/multiagent/dynamic/incomplete frameworks, which until now only had to be learned by reading journal articles. This book picks out the most important and influential models and present them in depth, while not losing sight of other streams of literature. My only complaint is the book is not exactly user-friendly in some places. I had to spend quite a bit of time trying to figure out some missing steps in derivations. Usually these were resolved in second reading, so it is not a major issue (reminded me of reading quantum mechanics...) The benefit of having a single definitive source of modern contract theory (as opposed to flipping through hundreds of journal articles) is enormous for a student like me who is new to the subject. I suggest reading Salanie along with it. Salanie is more readable and short, and these two complement each other very well.

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Customer Rating:
Summary: The Best Book on Contract Theory
Comment: We used selected parts of a preview version of this book at Carnegie Mellon in Fall 2004. This book is the best - better than Salanie's primer, which I am familar with in depth and also better than Laffont's Theory of Incentives, which I am familar with in parts.

The authors do a brilliant job of synthesizing hard to read Econometrica, JET, AER, QJE, articles down to key insights and managable proportions. They present results in a manner a graduate student can have a shot at understanding.

They discuss the expected topics - Adverse Selection and Moral Hazard; Screening, Signaling, Auctions. They do a particularly good job of explaining Adverse Selection and Moral Hazard in a dynamic framework.

This is hard material, certainly not trivial reading. You need some prior background in Microeconomic Theory of the level of Mas Collel / Reny and Jehle / Kreps and Game Theory of the level of Osbourne & Rubenstein / Fudenberg & Tirole. You also need to be a self-absorbed academic - ideally an enthusiastic and masochistic graduate student in Economics or closely related discipline. None of these books are of any damned use in the "real" world.

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