Contingent Contracts Research Articles

Using Contingency Contracting to Promote Social Interactions Among Students With ASD and Their Peers.

The purpose of this study was to evaluate the effect of peer training implemented alone and the effect of combining contingency contracting with peer training on promoting social interactions among students with ASD and their peers. Three students with ASD and six typically developing peers enrolled in an inclusive elementary school participated in the study. Ten-minute observations were conducted during recess time to collect data on the participants' social interactions. The data obtained showed that peer training alone did not result in improvement in social interactions. However, upon the introduction of contingency contracting, which facilitated the use of prompting and reinforcement, the participants engaged in a significantly higher number of social interactions. The findings about the effect of peer training and contingency contracting were consistent across the participants. The study results suggest several implications for practice and directions for future research.

Implementability with contingent contracts

We establish the equivalence of implementability by a contingent contract, implementability by a linear contract, acyclicity, and scaled cycle monotonicity when the type space is a compact metric space. We employ graph-theoretic arguments.

Productivity Shocks, Long-Term Contracts and Earnings Dynamics

This paper examines how employer- and worker-specific productivity shocks transmit to earnings and employment in an economy with search frictions and firm commitment. We develop an equilibrium search model with worker and firm shocks and characterize the optimal contract offered by competing firms to attract and retain workers. In equilibrium, risk-neutral firms provide only partial insurance against shocks to risk-averse workers and offer contingent contracts, where payments are backloaded in good times and frontloaded in bad times. We prove that there exists a unique spot target wage, which serves as an attraction point for smooth wage adjustments. The structural model is estimated on matched employer-employee data from Sweden. The estimates indicate that firms absorb persistent worker and firm shocks, with respective passthrough values of 27 and 11%, but price permanent worker differences, a large contributor (32%) to variations in wages. A large share of the earnings growth variance can be attributed to job mobility, which interacts with productivity shocks. We evaluate the effects of redistributive policies and find that almost 40% of government-provided insurance is undone by crowding out firm-provided insurance.

Productivity Shocks, Long-Term Contracts and Earnings Dynamics

This paper examines how employer- and worker-specific productivity shocks transmit to earnings and employment in an economy with search frictions and firm commitment. We develop an equilibrium search model with worker and firm shocks and characterize the optimal contract offered by competing firms to attract and retain workers. In equilibrium, risk-neutral firms provide only partial insurance against shocks to risk-averse workers and offer contingent contracts, where payments are backloaded in good times and frontloaded in bad times. We prove that there exists a unique spot target wage, which serves as an attraction point for smooth wage adjustments. The structural model is estimated on matched employer-employee data from Sweden. The estimates indicate that firms absorb persistent worker and firm shocks, with respective passthrough values of 27 and 11%, but price permanent worker differences, a large contributor (32%) to variations in wages. A large share of the earnings growth variance can be attributed to job mobility, which interacts with productivity shocks. We evaluate the effects of redistributive policies and find that almost 40% of government-provided insurance is undone by crowding out firm-provided insurance.

Bilateral trading with contingent contracts

We study the bilateral trading problem under private information. We characterize the range of possible mechanisms which satisfy ex-post efficiency, incentive compatibility, individual rationality, and budget balance. In particular, we show that the famous Myerson–Satterthwaite impossibility result no longer holds when contingent contracts are allowed.

Texas Attorney Fee Litigation under the Lodestar: Data on Appellate Cases Six Months After SCOTX Decision in Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019)

On April 26, 2019 the Texas Supreme Court handed down its seminal opinion in Rohrmoos v. UTSW DVA Healthcare and dramatically altered the litigation landscape in Texas by requiring lodestar-type evidence on reasonable and necessary hours and hourly rates in all attorney-fee shifting cases, whether based on contract or statute. See Rohrmoos Venture v. UTSW DVA Healthcare, LLP, No. 16-0006, 2019 WL 1873428 (Tex. Apr. 26, 2019). A few weeks later, the Court removed any doubt as to whether the same requirements applied when attorney’s fees were assessed as a sanction, and overruled contrary precedent at the intermediate appellate level. See Nath v. Texas Children’s Hospital, No. 17-0110, 576 S.W.3d 707 (Tex. June 21, 2019). This report presents data on the impact of the new SCOTX precedent on appellate cases that were already in the pipeline. It identifies all appellate opinions citing Rohrmoos that were handed down by Texas appellate courts through October 26, 2019; and a few that should have cited Rohrmoos, but did not. The current count of citing cases stands at 18, excluding Texas Supreme Court cases. Rohrmoos did not settle all fee-related legal questions and some of the since-decided lower-court cases are now being pursued in the Texas Supreme Court. The open questions include the following: 1. How appellate attorney’s fees can be proven using the lodestar method at trial before they have been incurred, so as to support a contingent award in a fixed dollar amount in the judgment. 2. Whether the lodestar approach applies to claims for unpaid fees asserted by attorneys against former clients when the attorney's fee bill is disputed and remains unpaid. 3. Whether the lodestar approach applies when an attorney or law firm seeks to recover from a client in quantum meruit in a situation where there is no express fee contract, or when a contingent contract is unenforceable under Texas Government Code §82.065. 4. Whether, when a fee claim is based on Chapter 38 of the Civil Practice and Remedies Code, the trial court may make the required factual determinations concerning a fee-shifting award via judicial notice in the absence of lodestar evidence submitted by a party seeking fees under that statute. 5. Under what circumstances the amount of attorney’s fees should be decided by the jury or by the judge, and what procedural vehicle may or should be employed to establish a fee claim by affidavit rather than through live expert testimony? 6. Whether a lay witness may testify on the factual components of the lodestar methodology for valuing legal services. 7. Whether reversal and remand or rendition is the proper remedy upon a determination on appeal that the evidentiary requirements established by Rohrmoos were not satisfied.

The Exposure Problem and Market Design

AbstractMarkets have an exposure problem when getting to the optimal allocation requires a sequence of transactions which if started but not completed leaves at least one trader with losses. We use laboratory experiments to evaluate the effect of the exposure problem on alternative market mechanisms. The continuous double auction performs poorly: efficiency is only 20% when exposure is high and 55% when it is low. A package market effectively eliminates the exposure problem: in low and high-exposure treatments efficiency is 82% and 89%, respectively. Building on stability notions from matching theory we introduce the concept of mechanism stability. A model of trade that combines mechanism stability with noisy best responses and imperfect foresight explains the difference in market performance. Finally, decentralized bargaining with contingent contracts performs well with perfect information and communication but not in the more realistic case when traders’ preferences are privately known.

From Surveillance To Control: Evaluation of A Larvicide Intervention Against Aedes aegypti In Brownsville, Texas.

South Texas is recognized as a potential area for the emergence and re-emergence of mosquito-borne diseases due to recent circulation of Zika, chikungunya, and dengue viruses. During 2017, high Aedes aegypti abundance found in the city of Brownsville, TX, in combination with the previous year's local transmission of Zika virus, triggered the activation of the Texas Department of State Health Services Emergency Mosquito Control Contingency Contract. A contract with the Clarke Environmental and Mosquito Control was a response to control Ae. aegypti, using a ground-based wide-area larvicide spray (WALS™) containing Bacillus thuringiensis israelensis. The WALS application was evaluated through a field-based bioassay and by comparing surveillance data pre- and post-WALS application. The WALS application bioassay demonstrated that the larvicide was effective up to 60 m into the target properties. Additionally, the number of Ae. aegypti captured in traps decreased in the WALS intervention areas compared with the untreated control areas, with an estimated 29% control.

How Do Information Technology Resources Facilitate Relational and Contractual Governance in Green Supply Chain Management?

Although a plethora of studies demonstrate that information technology (IT) has a positive influence on integration, collaboration and coordination side of green supply chain management, our knowledge about the influence of IT resources on governance side remains limited, especially the relational and contractual governance, two of the fundamental governances in green supply chain management. Based on the transaction and agency cost perspective and literature of information systems and B2B governance, this study investigates how IT resources affect the effects of relational and contractual governance. The results show that IT resources could improve the relational governance (i.e., joint-actions) and contractual governance (explicit and contingent contract clauses designing), and thus, effectively mitigate partner’s opportunism. Finally, the theoretical contribution and implications for managers are also given in the end.

A feasibility study to assess the individual and combined effects of financial incentives and monetary contingency contracts on physical activity

ObjectivesTo assess the feasibility, and demonstrate the preliminary relative efficacy of, individual and/or combined financial incentives interventions for physical activity. DesignEighty participants were randomised to conditions receiving either: (i) a monetary contingency contract (where individuals deposit money, forfeited or returned depending on goal achievement) plus a standard financial incentive (simple reward upon achievement), (ii) a monetary contingency contract only, (iii) a standard incentive only, or controls groups (iv) with or (v) without a set behavioural goal. Feasibility was investigated through assessment of intervention acceptability, cost-effectiveness, study retention, contamination and missing data. The effects of the interventions on (i) physical activity (daily steps over 2-weeks) and (ii) potential mediators (e.g. intentions) were assessed also. ResultsIndicators of feasibility were generally positive, with high acceptability ratings, low drop-out and low missing data. Participants receiving monetary contingency contracts plus standard financial incentives had (i) increased steps above controls (with some evidence of superiority over monetary contingency contract-only participants), (ii) the highest prevalence of goal achievement and cost-effectiveness (being between 57 and 317% cheaper per goal achiever versus other conditions) and (iii) larger deposits than contingency contract-only participants (with some evidence that higher deposits increased steps). There was evidence of contamination between participants, but the results were mostly robust after excluding ‘contaminated’ participants. No differences were observed on psychological mediators. ConclusionThis feasibility trial found promising results for a combined strategy approach to physical activity incentivisation, though a larger confirmatory trial is required.

Contracting on litigation

AbstractTwo risk‐averse litigants with different subjective beliefs negotiate in the shadow of a pending trial. Through contingent contracts, the litigants can mitigate risk and/or speculate on the trial outcome. Contingent contracting decreases the settlement rate and increases the volume and costs of litigation. These contingent contracts mimic the services provided by third‐party investors, including litigation funders and insurance companies. The litigants (weakly) prefer to contract with risk‐neutral third parties when the capital market is transaction‐cost free. However, contracting with third parties further decreases the settlement rate, increases the costs of litigation, and may increase the aggregate cost of risk bearing.

Motivating political support with group-based rewards

To compete in political contests, politicians need their supporters to contribute resources. We investigate how politicians can best allocate group-based prizes on a contingent basis to incentivize individual members of a group to exert effort on their behalf. We contrast contingent contracts with tournament style contests (Lazear and Rosen (Rank-order tournaments as optimum labor contracts. J Political Econ 1981; 89(5): 841–864)) and characterize when tournaments that create intergroup contests for prizes elicit more contributions than contingent contracts. By tying the allocation of prizes to the observed level of effort made by each group, politicians ameliorate the collective action problem that is created by the fact that each individual’s effort has only a minimal impact on the overall political contest. We examine the relative performance and stability of intergroup tournaments as a function of the number of groups and asymmetric group size.

Recursive Nash-in-Nash Bargaining Solution

The standard Nash-in-Nash solution is commonly applied in a number of policy applications. However, this bargaining framework does not capture renegotiation on off-equilibrium paths or contingent contracts and as a result in some situations the predictions of standard Nash-in-Nash are counter-intuitive. Thus, we propose a new bargaining solution for interdependent bilateral negotiations, which we call the recursive Nash-in-Nash bargaining solution. The main difference between this bargaining framework and the standard Nash-in-Nash is in the treatment of the disagreement point, which we assume is the bargaining payoffs given that all other negotiations happen with recognition of this disagreement rather than the equilibrium outcomes. We show that under some assumptions, the recursive Nash-in-Nash bargaining solution is the same as the Shapley value or the more general Myerson value for the corresponding cooperative game. This equivalence allows the recursive Nash-in-Nash solution to be calculated relatively easily for policy applications.

Odmeravanje štete u slučaju zaključenja ugovora o prodaji radi pokrića

The new Hungarian Civil Code - similarly to the Vienna Convention and the Principles of European Contract Law - regulates the so called contingency contract. A contingency contract is a special way of calculating damages. A contract is a contingency contract if the obligee replaces a quantity of goods not performed to him due to the debtor's breach of contract. The obligee may enter into a contingency contract in the event of the impossibility or withholding of performance or in the event of a delay giving rise to a right of termination. Contingency contracts are concluded either for purchase or for sale.

Bargaining over Contingent Contracts Under Incomplete Information

We study bargaining over contingent contracts in problems where private information becomes public or verifiable when the time comes to implement the agreement. We suggest a simple, two-stage game that incorporates important aspects of bargaining. We characterize equilibria in which parties always reach agreement, and study their limits as bargaining frictions vanish. We show that under mild regularity conditions, all interim-efficient limits belong to Myerson (1984)’s axiomatic solution. Furthermore, all limits must be interim-efficient if equilibria are required to be sequential. Results extend to other bargaining protocols.

Contingent Contracts in Banking: Insurance or Risk Magnification?

We examine whether the economy can be insured against banking crises with deposit and loan contracts contingent on macroeconomic shocks. We study banking competition and show that the private sector insures the banking system through such contracts, and banking crises are avoided, provided that failed banks are not bailed out. When risks are large, banks may shift part of them to depositors. In contrast, when banks are bailed out by the next generation, depositors receive non-contingent contracts with high interest rates, while entrepreneurs obtain loan contracts that demand high repayment in good times and low repayment in bad times. As a result, the present generation overinvests, and banks generate large macroeconomic risks for future generations, even if the underlying productivity risk is small or zero. We conclude that a joint policy package of orderly default procedures and contingent contracts is a promising way to reduce the threat of a fragile banking system.

Flexible Market for Smart Grid: Coordinated Trading of Contingent Contracts

A coordinated trading process is proposed as a design for an electricity market with significant uncertainty, perhaps from renewables. In this process, groups of agents propose to the system operator (SO) a contingent buy and sell trade that is balanced, i.e. the sum of demand bids and the sum of supply bids are equal. The SO accepts the proposed trade if no network constraint is violated or curtails it until no violation occurs. Each proposed trade is accepted or curtailed as it is presented. The SO also provides guidance to help future proposed trades meet network constraints. The SO does not set prices, and there is no requirement that different trades occur simultaneously or clear at uniform prices. Indeed, there is no price-setting mechanism. However, if participants exploit opportunities for gain, the trading process will lead to an efficient allocation of energy and to the discovery of locational marginal prices (LMPs). The great flexibility in the proposed trading process and the low communication and control burden on the SO may make the process suitable for coordinating producers and consumers in the distribution system.

Contingency Contracts for Weight Gain of Patients with Anorexia Nervosa in Inpatient Therapy: Practice Styles of Specialized Centers.

The treatment of patients with anorexia nervosa (AN) is often challenging, due to a high degree of ambivalence towards recovery and weight gain these patients often express. One part of the multimodal treatment is the utilization of treatment contracts (i.e., contingency contracts) that aim to motivate patients to gain weight by applying positive and negative consequences for the (non-)achievement of weight goals. The main aim of this study is to assess and analyze current standards of contingency contracts’ utilization in German eating disorder centers. n = 76 mental health professionals of twelve specialized university centers in Germany that are currently or were formerly treating patients with AN in an inpatient setting participated. Most experts use contingency contracts in their clinic with weekly weight goals ranging between 500 and 700 g. Overall effectiveness and significance of contingency contracts for the inpatient treatment of patients with AN was rated high. Typical characteristics of a contingency contract in specialized German university hospital centers, such as the most frequent consequences, are described. The survey results assist the planning of further studies aiming to improve the multimodal treatment of patients with AN. For clinical practice, using external motivators such as contingency contracts as well as targeting internal motivation (e.g., by using motivational interviewing) is proposed.

Contingent Convertible Bonds for Sovereign Debt Risk Management

Abstract We consider convertible bonds that contractually stipulate payment standstill, contingent on a market indicator of a sovereign’s credit worthiness breaching a distress threshold. This financial innovation limits ex ante the likelihood of debt crises and imposes ex post risk sharing between creditors and the debtor. Drawing from literature on contingent contracts, neglected risks, and bank CoCo, we extend prevailing arguments in favor of sovereign CoCo (S-CoCo). We discuss issues relating to their design: which market trigger, market discipline and sovereign incentives, and errors of false alarms or missed crises, and provide supporting evidence with eurozone data and a simple simulation on the use of S-CoCo. We develop a risk management model using these instruments to trade off the expected cost for sovereign financing over a long horizon, with tail risk. The model shows how contingent bonds can improve a country’s debt risk profile. Using Greece as a case study the model illustrates improvements in expected cost vs. tail risk for the country when using contingent debt.

The effectiveness of contingency management in the treatment of patients with anorexia nervosa: A systematic review.

Contingency management in stipulating weight gain is routinely used in the treatment of anorexia nervosa, however, empirical investigations concerning its effectiveness have been scarce. This systematic review was conducted according to the PRISMA statement. Of N=973 hits, 42 full-texts were included in the qualitative synthesis (11 theoretical texts, 19 case reports, 12 descriptive, cohort, and controlled trials). A central topic in the included publications concerns the enhancement of patients' autonomy through participation in the contingency management process. This heightened autonomy is achieved by using contingency contracts. Positive short-term effects on weight gain were shown, whereas follow-up results were heterogeneous. Although contingency contracts are widely used in clinical practice, our systematic review shows that empirical evidence on underlying mechanisms and efficacy is still scarce. Using an explicit treatment contract can enhance patients' motivation, compliance, and autonomy. Clinical practice should see further development including innovative motivation enhancing and conflict dissolving techniques in addressing the pronounced ambivalence often shown by patients with anorexia nervosa.