Contract Design

Short Description

Contract Design is taught by Professor Alexander Stremitzer and aims to bridge the gap between economic contract theory, contract law, and the writing of real-world contracts. In this course, we take a systematic approach to contract design. This means we first analyze the economic environment in which a transaction takes place, and then engineer contracts that achieve the desired outcome. Note that this is NOT a legal drafting class that focuses on contractual language, sophisticated parties use to make courts enforce their contracts. Instead, in Contract Design I, you will learn what the content of a contract should be so that parties can reach their goals.

Please find the link to the online teaching materials.

Interested in Contract Design I? Watch this introductory video to the course!


Extended Description

Contracts are agreements between parties to engage in transactions. A good contract creates value by giving parties the right incentives to meet their objectives. To help you become sophisticated contract designers, we draw from insights, for which more than half a dozen Nobel Prizes were awarded in the past two decades and apply them to the art of writing real-world contracts. Contract Design will provide you with analytical tools that allow you to think systematically about contracting as lawyers, business leaders, and startup founders.

Contract Design is taught in a flipped classroom setting. You will be asked to watch a series of videos (10-15 minutes each) that we produced for this course. These video episodes introduce you to key concepts of economic, behavioral, and experimental contract theory. We will cover topics such as moral hazard, adverse selection, elicitation mechanisms, relationship-specific investments, and relational contracting. We will then use class time to discuss a selection of exciting real-world case studies, ranging from purchases & sales of assets, oil & gas exploration, movie production & distribution, construction & development, M&A deals, venture capital financing, to executive compensation and many other types of transactions.

You can find all course materials on the Course Webpage. You will have to log on to the course webpage with your username and password. In case your university has not purchased a license, accessing the course materials will cost 129.- USD (Currently UCLA does not have such a subscription).