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Behavioral, Econometrics and Theory Seminar Series Presents: Roberto Corrao
January 20 @ 1:40 pm
Event Series
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Economics Behavioral, Econometrics, & Theory Seminar
Date: Tuesday, January 20, 2026
Time: 1:40-3:00 p.m.
Location: E2-499
Speaker: Roberto Corrao
Title: Assistant Professor of Economics
Affiliation: Stanford University
Host: Gerelt Tserenjigmid
Seminar title: Contractibility Design
ABSTRACT:
We introduce a model of incentive contracting in which the principal, in addition to
writing contracts, must engage in contractibility design: creating an evidence structure
that allows them to prove when the agent has breached the contract. Designing an
evidence structure entails both (i) front-end costs borne ex ante, such as those of
drafting contracts, and (ii) back-end costs borne ex post, such as those of generating
evidence. We find that, under even small front-end costs, optimal contracts are coarse,
specifying finitely many contingencies out of a continuum of possibilities. In contrast,
under even large back-end costs, optimal contracts are complete. Applied to the design
of procurement contracts, our results rationalize: (i) the discreteness of contracts, (ii)
the presence of similarly vague contracts in low-stakes and high-stakes settings, and
(iii) the discontinuous adjustment of contracts to changes in the economic environment.
