Journal of Economic Methodology 7 (3):313-339 (2000)

Abstract
We discuss contract theory from a combined Austrian/new institutional view. In the latter view, the world is seen as shot through with ignorance and transaction costs, but, as a tendency, entrepreneurial activity responds to the problems caused by these. All modelling must critically reflect this. This ontological commitment is contrasted to various isolations characteristic of contract theory, specifically the modelling strategy of introducing often ad hoc and unexplained constraints that suppress margins and possibilities of entrepreneurial actions that would be open to real-world decision-makers. We illustrate this by means of, for example, the treatment of asymmetric information under complete contracting and the notion of control rights under incomplete contracting.
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DOI 10.1080/135017800453724
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References found in this work BETA

A Realist Theory of Science.Caroline Whitbeck - 1977 - Philosophical Review 86 (1):114.
On the Method of Isolation in Economics.Uskali Mäki - 1992 - Poznan Studies in the Philosophy of the Sciences and the Humanities 26:19-54.
Isolation, Idealization and Truth in Economics.Uskali Mäki - 1994 - Poznan Studies in the Philosophy of the Sciences and the Humanities 38:147-168.

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