Courts, Contracts and Interference

This paper shows that the possibility of interference in court proceedings, or more generally jamming other agents’ messages, has signiÿcant consequences for the form of optimal contracts and the exibility of decisions that can be made inside ÿrms. Our approach o ers a new view of authority, basing it on the ability of parties to have their say in court. Interference gives authority a role in worlds where it is traditionally absent in contract theory, like simple employment relationships without speciÿc investments.