require so much money

Publisher:   The MIT Press
Number Of Pages:   232
Publication Date:   1997-03-15
Sales Rank:   847049
ISBN / ASIN:   0262193868
EAN:   9780262193863
Binding:   Hardcover
Manufacturer:   The MIT Press
Studio:   The MIT Press

Although it is one of the major achievements in the history of economic thought, the general equilibrium model is not completely satisfactory as a descriptive tool. In the 1970s several economists settled on a new way to study economic relationships that is often called the "economics of information." The theory of contracts is one of its main building blocks.

The theory of contracts uses partial equilibrium models that take into account the full complexity of strategic interactions between privately informed agents in well-defined institutional settings. The models sum up the constraints imposed by the prevailing institutional setting through a contract, either explicit or implicit. They make intensive use of noncooperative game theory with asymmetric information.

The Economics of Contracts introduces graduate students and nonspecialist professional economists to the theory of contracts. It grew out of a course Professor Salanié gave to third-year Stanford graduate students and third-year students at the Ecole Nationale de la Statistique et de l'Administration Economique. The book focuses on the methods used to analyze the models, but also discusses a few of the many applications the theory has generated in various fields of economics. The author's goal is to give readers the basic tools to create their own applications.

Review:

Broad introduction with a lack of depth

...so if that's what you want, then this book is for you. However, if you're using this for your first look at contract theory, you may well be disappointed (as I am). I don't credit Salanie for leaving out the technical details of the models, because he doesn't effectively convey the depth of the models in his largely intuitive treatment. I'm all for intuition and simplicity, but his book leaves me with more questions than answers after reading it.

I'm browsing around on Amazon for a better book, so I thought I'd write a quick rating so that other lowly beginners like me don't make the same mistake I made in purchasing this as my only textbook.

On the other hand, I suppose if you want a concise overview with the sketch of most of the important contract theory models, then this might be what you're looking for.

Review:

well chosen topics, poorly written

The topics and papers discussed in this book are great, in that sense, it's a good book. However, the book is very poorly written.

The author tries to avoid mathematical details of the models but such attempt makes the book not well concatenated. For seriously readers, you learn a lot more by reading the papers cited in this book than reading the book itself.

Review:

A good book (with some minor problems)

Salanie's book covers the standard areas of contract theory; adverse selection, moral hazard, signalling etc, along with chapters on the dynamics of complete contracts, incomplete contracts and a final chapter on the empirical work on contracts. The material on dynamics and incomplete contracts is most welcome as many other books in this area do not cover it. Perhaps more space could have been given over to incomplete contracts given the increasing importance of them.

The book manages to cover a large amount of material in a relatively small number of pages, it is just over 200 pages. Most of this material is presented in an accessible and readable manner and most graduate students in economics should be able to read the book.

The most obvious problem with the book is the number of small errors it contains. Some of the figures have points that are in the wrong place; there are a number of what look like typos in the text, being told that an indifference curve goes through a point (q2,t2) when in fact it goes through (q1,t1) for example. While these are only minor problems they do distract from the otherwise good impression that the book makes.