Economics Seminar | Analysis of Contracting and Breach Decisions Under Various Damage Remedies, March 24

Matt McGill

The Economics Seminar series presents Matt McGill discussing “An Analysis of Contracting and Breach Decisions Under Various Damage Remedies” on March 24 at 3 p.m. in Bentley Annex 302.

An Ohio University alum, McGill earned a B.S. in Economics from the College of Arts & Sciences at Ohio University, where he now is a math specialist in the Office of Instructional Innovation.

Abstract: This paper aims to investigate the foundational assumptions underlying the expectation damages remedy, which remain largely untested despite the remedy’s widespread use. Its popularity among courts is largely predicated on theoretical conjectures that claim that expectation damages reflect the damages that parties would have set for themselves, and that inefficient breach will not occur under this remedy. To test these conjectures, laboratory experiments will be conducted where participants will negotiate the terms of a contract, before one participant is given a chance to breach. Each of the three treatments will vary the damage remedy applied, and in one treatment participants will negotiate damages for themselves. The rates of inefficient breach and non-breach will be compared between treatments, as will the prices and damages that participants negotiate.