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Author: Leonardo Felli

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Theoretical Economics Paper

Does Competition Solve the Hold-up Problem?

Leonardo Felli and Kevin Roberts

In an environment in which heterogenous buyers and sellers undertake ex-ante investments, the presence of market competition for matches provides incentives for investment but may leave inefficiencies that take the form ...Read more...

1 September 2011

Theoretical Economics Paper

Statute Law or Case Law?

Luca Anderlini, Leonardo Felli and Alessandro Riboni

In a Case Law regime Courts have more flexibility than in a Statute Law regime. Since Statutes are inevitably incomplete, this confers an advantage to the Statute Law regime over the Case Law one. However, all Courts rul...Read more...

August 2008

Theoretical Economics Paper

Active Courts and Menu Contracts

Luca Anderlini, Leonardo Felli and Andrew Postlewaite

We describe and analyze a contractual environment that allows a role for an active court. The model we analyze is the same as in Anderlini, Felli, and Postlewaite (2006). An active court can improve on the outcome that t...Read more...

October 2006

Theoretical Economics Paper

SHOULD COURTS ALWAYS ENFORCE WHAT CONTRACTING PARTIES WRITE? This paper replaces TE/2003/464

Luca Anderlini, Leonardo Felli and Andrew Postlewaite

We find an economic rationale for the common sense answer to the question in our title — courts should not always enforce what the contracting parties write. We describe and analyze a contractual environment that allows ...Read more...

October 2006

Theoretical Economics Paper

Firm-Specific Training

Leonardo Felli and Christopher Harris

This paper introduces two complementary models of firm-specific training: an informational model and a productivity-enhancement model. In both models, market provision of firm-specific training is inefficient. However, t...Read more...

April 2004

Theoretical Economics Paper

Should Courts Always Enforce What Contracting Parties Write? This paper is replaced by TE/2006/510

Luca Anderlini, Leonardo Felli and Andrew Postlewaite

We find an economic rationale for the common-sense answer to the question in our title ¿ courts should not always enforce what the contracting parties write. We describe and analyse a contractual environment that allows ...Read more...

November 2003

Theoretical Economics Paper

Endogenous Lobbying

Leonardo Felli and Antonio Merlo

In this paper we present a citizen-candidate model of representative democracy with endogenous lobbying. We find that lobbying induces policy compromise and always affects equilibrium policy outcomes. In particular, even...Read more...

February 2003

Theoretical Economics Paper

Courts of Law and Unforeseen Contingencies

Luca Anderlini, Leonardo Felli and Andrew Postlewaite

We study a contracting model with unforeseen contingencies in which the court is an active player. Ex-ante, the contracting parties cannot include the risky unforeseen contingencies in the contract they draw up. Ex-post ...Read more...

February 2003

Theoretical Economics Paper

Unforeseen Contingencies

Nabil J Al-Najjar, Luca Anderlini and Leonardo Felli

We develop a model of unforeseen contingencies. These are contingencies that are understood by economic agents ' their consequences and probabilities are known' but are such that every description of such events necessar...Read more...

February 2002

Theoretical Economics Paper

Does Competition Solve the Hold-up Problem?

Leonardo Felli and Kevin Roberts

In an environment in which both buyers and sellers can undertake match specific investments, the presence of market competition for matches may solve hold-up and coordination problems generated by the absence of complete...Read more...

May 2001

Theoretical Economics Paper

Transaction Costs and the Robustness of the Coase Theorem

Luca Anderlini and Leonardo Felli

This paper explores the extent to which the presence of ex-ante transaction costs may lead to failures of the Coase Theorem. In particular we identify and investigate the basic 'hold-up problem' which arises whenever the...Read more...

February 2001

Theoretical Economics Paper

Bounded Rationality and Incomplete Contracts

Luca Anderlini and Leonardo Felli

This paper explores the link between boundedly rational behaviour and incomplete contracts. The bounded rationality of the agents in our world is embodied in a constraint that the contracts they write must be algorithmic...Read more...

December 2000

Theoretical Economics Paper

Costly Bargaining and Renegotiation

Luca Anderlini and Leonardo Felli

We identify the inefficiencies that arise when negotiation between two parties takes place in the presence of transaction costs. First, for some values of these costs it is efficient to reach an agreement but the unique ...Read more...

October 1998

Theoretical Economics Paper

Costly Coasian Contracts

Luca Anderlini and Leonardo Felli

We identify and investigate the basic 'hold-up problem' which arises whenever each party to a contract has to pay some ex-ante cost for the contract to become feasible. We then proceed to show that, under plausible circu...Read more...

October 1998

Theoretical Economics Paper

Costly Contingent Contracts

Luca Anderlini and Leonardo Felli

We identify and investigate the basic ?hold-up? problem which arises whenever each party to a contingent contract has to pay some ex-ante cost for the contract to become feasible. We then proceed to show that, under plau...Read more...

October 1996

Theoretical Economics Paper

Friendships in Vertical Relations - (Now published under the title 'Renegotiation and Collusion in Organisations', in 'Journal of Economics and Management Strategy', 9(4)(Winter 2001), pp.453-483.)

Leonardo Felli and J M Villas-Boas

It has been argued that collusion among the members of an organization or a vertical structure creates efficiency losses, and hence should be prevented. This paper shows that whenever collusion takes the form of co-insur...Read more...

September 1996

Theoretical Economics Paper

Preventing Collusion Through Discretion

Leonardo Felli

Large public bureaucracies are usually less efficient than modern private corporations. This paper explains how the degree of discretionary power might account for this difference in efficiency. In fact, increasing the d...Read more...

1996

Theoretical Economics Paper

Job Matching, Learning and the Distribution of Surplus (Revised version published in Journal of Political Economy, vol.104 (1996), pp.838-868 (new title: Learning, Wage Dynamics, and Firm-Specific Human Capital.)

Leonardo Felli and Christopher Harris

We study wage determination in a job-matching model, under the assumption that wages may be continuously renegotiated, so as to reflect the employee's endogenous outside option. We characterize the unique equilibirum of ...Read more...

1994

Theoretical Economics Paper

Incomplete Written Contracts: Endogenous Agency Problems (Revised version, 'Describability and Agency Problems', published in European Economic Review, vol.42 (1998), pp.35-59.)

Luca Anderlini and Leonardo Felli

This paper suggests a reason, other than asymmetric formation, why agency contracts are not explicitly contingent on the contracting parties' performances or actions. This reason is the formal nature of contracts: the fo...Read more...

1993

Theoretical Economics Paper

Incomplete Written Contracts: Undescribable States of Nature (Now published in Quarterly Journal of Economics (1994), vol.109, pp.1085-1124.)

Luca Anderlini and Leonardo Felli

This paper extends the classic two-armed bandit problem to a many-agent setting in which N players each face the same experimentation problem. The difference with the single-agent problem is that agents can now learn fro...Read more...

1993