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Contract theory: Contract theory is the study of how people and organizations construct and develop legal agreements. It is based on the idea that contracts are designed to achieve efficiency by aligning the incentives of the parties involved. Contract theory is a branch of economics that studies how economic actors can and do construct contractual arrangements, generally in the presence of information asymmetry. See also Information asymmetry, Contracts.
Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

Author Concept Summary/Quotes Sources

James M. Buchanan on Contract Theory - Dictionary of Arguments

Brocker I 562
Contract Theory/Buchanan/Kersting: On the one hand, contract theories are individualistic in that they attribute the legitimacy of state rule and the recognition worthiness of normative principles to the consent of individuals; on the other hand, they are democratic, since they demand that power organisations and political-moral principles must answer equally to everyone. They are also proceduralistic: the criterion of legitimacy and justification is the possible contractual agreement of all. (1)(2)
Brocker I 564
Contract Theory/Buchanan: Buchanan has developed a realistic contract theory that is consistently characterized by an economic reasoning and only accepts principles and institutions if they can only be traced back to the contractual harmony of subjective preferences. (see Kersting 2010) (3).
Problem/Kersting: a contract is in a way a thought experiment, which cannot be understood by all concerned equally. Here there are arguments based on interests or situations (so-called "wisdom arguments").
Solution/Buchanan: his contract theory frees the economism of the contract content argument from the contractual moral bracketing and extends it to the entire structure of the contractualist argument. See Buchanan 1975 (4) See Anarchism/Buchanan
Brocker I 565
Contracts/Buchanan: Contract negotiations only take place when (...) it is advantageous for the natural state dweller with the best natural means of power. See Equilibrium/Buchanan.
Brocker I 566
Negotiations/Buchanan: Negotiations are conducted to reduce unproductive defence costs. Both A and B recognize that they are better off if they can save on defence costs. Relationship: The "natural balance" (see Equilibrium/Buchanan) has a certain stability. The parties can only improve their position through a disarmament agreement.
Brocker I 573
KerstingVsBuchanan: The starting position chosen by Buchanan is unsuitable (...) in terms of legitimation theory. On the basis of contract theories that operate with real, realistic, counterfactual idealizations and normative framework conditions, it is not possible to develop a satisfactory theory of justification or even one that does justice to the minimum conditions of justification theory.
Brocker I 575
KerstingVsBuchanan: It is the violence in Buchanan that draws up the contracts. The coontract provides only the legal seal of natural power-sharing.

1. Wolfgang Kersting, Politische Philosophie des Gesellschaftsvertrags, Darmstadt 2005., S. 19-55
2. Wolfgang Kersting, Vertragstheorien. Kontraktualistische Theorien in der Politikwissenschaft, Stuttgart 2016, S. 9-34.
3. Wolfang Kersting, »Kritik des Wirtschaftsliberalismus«, in: ders. (Hg.), Freiheit und Gerechtigkeit. Die moralischen Grundlagen der Sozialen Marktwirtschaft, Frankfurt/M. u. a. 2010, 11-26.
4. James M. Buchanan, The Limits of Liberty. Between Anarchy and Leviathan, Chicago/London 1975. Dt.: James M. Buchanan, Die Grenzen der Freiheit. Zwischen Anarchie und Leviathan, Tübingen 1984.

Wolfgang Kersting, „James M. Buchanan, Die Grenzen der Freiheit“ in: Manfred Brocker (Hg.) Geschichte des politischen Denkens. Das 20. Jahrhundert. Frankfurt/M. 2018

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.

EconBuchan I
James M. Buchanan
Politics as Public Choice Carmel, IN 2000

Brocker I
Manfred Brocker
Geschichte des politischen Denkens. Das 20. Jahrhundert Frankfurt/M. 2018

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