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Author: Oliver Hart

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Theoretical Economics Paper

AGREEING NOW TO AGREE LATER: Contracts that Rule Out but do not Rule In

Oliver Hart and John Moore

We view a contract as a list of outcomes. Ex ante, the parties commit not to consider outcomes not on the list, i.e., these are 'ruled out'. Ex post, they freely bargain over outcomes on the list, i.e., the contract spec...Read more...

March 2004

Theoretical Economics Paper

On the Design of Hierarchies: Coordination Versus Specialization

Oliver Hart and John Moore

We develop a model of hierarchies based on the allocation of authority. A firm's owners have ultimate authority over a firm's decisions, but they have limited time or capacity to exercise this authority. Hence owners mus...Read more...

October 1999

Theoretical Economics Paper

Foundations of Incomplete Contracts

Oliver Hart and John Moore

In the last few years, a new area has emerged in economic theory, which goes under the heading of 'incomplete contracting'. However, almost since its inception, the theory has been under attack for its lack of rigorous f...Read more...

September 1998

Theoretical Economics Paper

Cooperatives vs. Outside Ownership

Oliver Hart and John Moore

We are concerned with the design of a constitution for a firm - an ex ante contract which assigns residual rights of control (and possibly residual income rights) without reference to the issue to be decided. We focus at...Read more...

January 1998

Theoretical Economics Paper

Default and Renegotiation: A Dynamic Model of Debt

Oliver Hart and John Moore

We analyse the role of debt in persuading an entrepreneur to pay out cash flows, rather than to divert them. In the first part of the paper we study the optimal debt contract - specifically, the trade-off between the siz...Read more...

January 1997

Theoretical Economics Paper

A New Bankruptcy Procedure that Uses Multiple Auctions - (Now published in 'European Economics Review', vol.41(3/5), 1997, pp.461-473.)

Oliver Hart, R La Porta Drago, F Lopez-de-Silanes and John Moore

We propose a new bankruptcy procedure that makes use of multiple auctions. The procedure is designed to work even when capital markets do not function well (for example, in developing economies, or in economies in transi...Read more...

October 1996

Theoretical Economics Paper

The Governance of Exchanges: Members' Co-operatives Versus Outside Ownership

Oliver Hart and John Moore

The paper compares co-operative governance structure to outside ownership. The distinction between the two lies in who has residual rights of control. It is found that a co-operative becomes relatively less efficient as ...Read more...

1996

Theoretical Economics Paper

The Economics of Bankruptcy Reform (Now published in Journal of Law, Economics and Organization, vol.8, no.3, (1992), pp. 523-546.)

Philippe Aghion, Oliver Hart and John Moore

We propose a new bankruptcy procedure. Initially, a firm's debts are cancelled, and cash and non-cash bids are solicited for the 'new' (all-equity) firm. Former claimants are given shares, or options to buy shares, in th...Read more...

1992

Theoretical Economics Paper

A Theory of Debt Based on the Inalienability of Human Capital

Oliver Hart and John Moore

Consider an entrepreneur whocneeds to raise funds from an investor, but cannot commit not to withdraw his human capital from the project. The possibility of a default or quit puts an upper bound on the total indebtedness...Read more...

1991