Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93957
Authors: 
Schweizer, Urs
Year of Publication: 
2006
Series/Report no.: 
SFB/TR 15 Discussion Paper 162
Abstract: 
A setting of reliance investments is explored where one of the parties to a contract obtains private information concerning his utility or cost function that remains hidden to the other party and to courts. As a consequence, it will be a difficult task to award expectation damages corrrectly to a party with private information who sufffers from breach of contract. While a revelation mechanism would exist that leads to the first best solution, assessing expectation damages correctly turns out to be at odds with ex post efficiency. I conclude that, under asymmetric information, the performance of expectation damages falls short of what more general mechanisms could achieve.
Subjects: 
reliance investments
expectation damages
breach of contract
hidden information
JEL: 
K12
D82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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