This book investigates the ways in which social norms and bounded
rationality shape different contracts in the real world. It brings into
focus existing research into optimal contracts, draws important lessons
from that research, and outlines prospects for future investigation.
rationality has acknowledged effects on the power of incentive
provisions, such as deviations from sufficient statistic theorem, the
power of optimal incentives, and the effects of optimal contracts in
multicultural environments. The introduction of social norms to bounded
rationality opens up new avenues of investigation into contracts and
This book makes an important contribution to the
study of bounded rationality by pulling together many separate strands
of research in the area of mechanism design, and providing detailed
analysis of the impact of societal values on contracts.