Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174496
Authors: 
Engel, Christoph
Freund, Lars
Year of Publication: 
2017
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods 2017/17
Abstract: 
Under common law, the standard remedy for breach of contract is expectation damages. Under continental law, the standard is specific performance. The common law solution is ex post efficient. But is it also ex ante efficient? We use experimental methods to test whether knowing that non-fulfilment will only lead to damages deters mutually beneficial trade. The design excludes aversion against others willfully breaking their promises. We find that there is indeed less trade if specific performance is not guaranteed, provided the preference for the traded commodity is sufficiently pronounced.
Subjects: 
remedies
breach of contract
specific performance
expectation damages
reliance damages
donation
experiment
JEL: 
C91
D02
D03
D61
D62
D64
H23
K12
Document Type: 
Working Paper

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