Tim Friehe, Christoph Rössler

Damage Measures for Contract Breach when Buyers Have Reference-Dependent Preferences

Volume 178 () / Issue 1, pp. 54-79 (26)
Published 20.12.2021

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Using the traditional law-and-economics production contract model with a fixed price, this paper analyzes the breach and reliance incentives that result from damage measures for breach of contract when buyers have reference-dependent preferences. We show that buyer's reference-dependent preferences can produce results at odds with the traditional portrayal. Importantly, we find that expectation damages are no longer generally superior to reliance damages.

Tim Friehe No current data available.

Christoph Rössler No current data available.