Contract Theory

This article describe about Contract Theory, which draws upon principles of financial and economic behavior as different parties have different incentives to perform or not perform particular actions. It analyzes how different parties make decisions to create a contract with particular terms in case uncertain conditions happen, and it also covers how individuals and businesses make contracts with asymmetric information. It applies to both multi-party negotiations between a principal and one or more agents and contracts created by a single individual or organization to specify details of multi-party agreements, such as employee contracts.