Free contract

Abstract: The paper provides a contractual equilibrium model of differentiated housing markets. Within a competitive framework the existence of a contract equilibrium, respecting certain enforceability conditions, is shown. The allocation, induced by these contract equilibria in the housing markets, is possibly characterized by demand rationing, even under the assumption of free contract markets.

Abstract: We incorporate word of mouth (WoM) in a classic Maskin-Riley contracting problem, allowing for referral rewards to senders of WoM. Current customers’ incentives to engage in WoM can affect the contracting problem of a firm in the presence of positive externalities of users. We fully characterize the optimal contract scheme and provide other comparative statics. In particular, we show that offering a free contract is optimal only if the fraction of premium users in the population is small. The reason is that by offering a free product, the firm can incentivize senders to talk by increasing expected externalities that they receive and this can (partly) substitute for paying referral rewards only if there are few premium customers. This result is consistent with the observation that companies that successfully offer freemium contracts oftentimes have a high percentage of free users.

Abstract: Abuse-freeness is a new secure requirement proposed in contract signing protocols,and appears ambiguous.Based on the interactive theorem prover Isabelle/HOL,the paper deduces the unequivalent relation between "TTP’s abort decision" and "aborted contract signing",gives formal definition of "contract signing failed",proposes a new formal description of abuse-freeness,and verifies abuse-freeness of BW multi-party contract signing protocol.