Empirical research on contracts spans a variety of issues, including the boundary of the firm, the duration of contractual relations, and the structure of incentive systems with particular emphasis on pricing structures. Masten and Saussier (2002) provide a cursory overview of the theoretical frameworks that under gird much of this research and the supporting empirical research. In the process, they point to the potential convergence of the theoretical literature. Mahoney (1992) provides a framework from which to build a more integrated theory of contract that also generates testable hypotheses like unto those discussed by Masten and Saussier. Sykuta and Parcell (2003) extend Mahoney's framework with a broader understanding of the fundamental elements of contract design.

In addition to challenges of the theoretical underpinnings, empirical research on contracts is confounded by a difficulty in collecting contracts or data on contracts, the multidimensional nature of transactions, and problems of measurement key dimensions of transactions and the development of appropriate proxies for qualitative concepts. These challenges also call for more sophisticated econometric techniques to address the nature of the data and the issue of sample selection.

This workshop will provide an overview of each of these issues, drawing from review articles of empirical research as well as specific examples of econometric analyses of contracts and contracting problems. In the process, participants will be encouraged to discuss innovative alternate measures and techniques to address lingering challenges in the literature.