Law Commons^™

Are All Contractual Obligations Created Equal?, Doron Teichman, Yuval Feldman

Doron Teichman

At the core of the economic analysis of contract law lies the concept of options. According to this concept, parties are expected to perform their contractual duties if, and only if, the legal price of breach (i.e. damages) is lower than the cost of performance. This Article challenges this concept, and shows that peoples’ performance decisions are driven by non-instrumental forces such as moral commitments, social norms, and motivated reasoning. To demonstrate this point, this Article presents a series of three experimental surveys that measure and compare participants’ attitudes toward breaching a contract. Participants answered questions in the context of …