THE LAW&ECONOMICS OF INCOMPLETE CONTRACTS: THREE ESSATS.
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description: THE LAW&ECONOMICS OF INCOMPLETE CONTRACTS: THREE ESSAYS The present thesis is essentially devoted to exploring the legal consequences of bounded rationality. This concept, due to H. Simon, constitutes one of the first erosion of classical economics. In particular: in the traditional economics framework, the agent is considered endowed with full knowledge, letting him to foresee all the future states of the world. However this assumption turned out to be unrealistic, making useless most of the predictions economists suppose to do. For this reason, it has been proposed to modify the classical assumptions about rationality, changing from full to bounded rationality, defined as “rational choice that takes into account the cognitive limitations of the decision maker of both knowledge and computational capacity”. Within this general framework, it arose the notion (and the theory) of incomplete contracts: that is, because people are not omniscient (again, bounded rational), they cannot foresee every contingency, and so, contracts should necessarily be incomplete. That is, they lack provisos for some state of the world, which either cannot be described or cannot be foreseen. However, while the traditional approach spoke about incompleteness of contracts, we think that this framework can be extended to all legal regulations, so to also include the incompleteness of the law itself. The thesis applies this conceptual framework to three different areas of the law: (i) general theory, (ii) civil law, (iii) administrative law. 1. The first essay (entitled “Incompleteness of the Law and the Role of Standards in a Law&Economics Perspective”), by discussing the long-standing question about rules and standards, argues (presenting two recent economic models) that non-specific norms can cope with the issue of incompleteness. Furthermore, it tries to develop and extend one of the two models, in order to find a rationale for the use of “principles” (meant in the legal-technical meaning).…
abstract: THE LAW&ECONOMICS OF INCOMPLETE CONTRACTS: THREE ESSAYS The present thesis is essentially devoted to exploring the legal consequences of bounded rationality. This concept, due to H. Simon, constitutes one of the first erosion of classical economics. In particular: in the traditional economics framework, the agent is considered endowed with full knowledge, letting him to foresee all the future states of the world. However this assumption turned out to be unrealistic, making useless most of the predictions economists suppose to do. For this reason, it has been proposed to modify the classical assumptions about rationality, changing from full to bounded rationality, defined as “rational choice that takes into account the cognitive limitations of the decision maker of both knowledge and computational capacity”. Within this general framework, it arose the notion (and the theory) of incomplete contracts: that is, because people are not omniscient (again, bounded rational), they cannot foresee every contingency, and so, contracts should necessarily be incomplete. That is, they lack provisos for some state of the world, which either cannot be described or cannot be foreseen. However, while the traditional approach spoke about incompleteness of contracts, we think that this framework can be extended to all legal regulations, so to also include the incompleteness of the law itself. The thesis applies this conceptual framework to three different areas of the law: (i) general theory, (ii) civil law, (iii) administrative law. 1. The first essay (entitled “Incompleteness of the Law and the Role of Standards in a Law&Economics Perspective”), by discussing the long-standing question about rules and standards, argues (presenting two recent economic models) that non-specific norms can cope with the issue of incompleteness. Furthermore, it tries to develop and extend one of the two models, in order to find a rationale for the use of “principles” (meant in the legal-technical meaning).…
author: CARRERA, CARLO
language: eng
keywords: incomplete contract, rules versus standard, abuse of authority, fuzzy logic, GHM model, Settore ECON-02/A - Politica economica, Settore GIUR-11/A - Diritto privato comparato
date published: 2026-01-16
date modified: 2026-07-27T20:19:10Z
provider: Università degli Studi di Milano
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: Università degli Studi di Milano

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value: https://hdl.handle.net/2434/1209918