ABSTRACT
We modify the concept of renegotiation-proofness by stating that a contract is credible if it is robust against credible redesigns. A contract that is, in this sense, recursively renegotiation-proof is shown to exist under general conditions. We provide a procedure to identify all contracts that meet the property. The framework is applied to bilateral bargaining. We demonstrate that a surplus maximizing second best mechanism can be implemented by a
recursively renegotiation-proof contract.
Vartiainen, Hannu, Recursively Renegotiation-Proof Contracts. Posted to SSRN 14 November 2025.
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