Have you ever wondered why your services contract is just not working properly? Why the incentives you put in the contract are not delivering the desired outcome? The reason is most likely due to an area of study called contract theory and this year, the Nobel Memorial Prize in Economic Science was awarded to the economists Hart and Holmström for the development of contract theory.
These prize-winning economists have provided valuable theoretical tools for understanding real-life contracts as well as potential pitfalls in contract design.
Is there something we can learn from this as contract owners and apply to services contracts? At Acquire, we think so.