Contracts, reference points and the theory of the firm

This 79 minute audio is of Professor Oliver Hart's inaugural Coase Lecture delivered on the 22 February 2007 at the London School of Economics. In this lecture, Oliver Hart discusses how his recent work with John Moore on contracts as reference points can be used to shed light on the theory of the firm.

A copy of the published paper based on the lecture is available here. The abstract reads,

I argue that it has been hard to make progress on Coase's theory of the firm agenda because of the difficulty of formalizing haggling costs. I propose an approach that tries to move things forward using the idea of aggrievement costs, and apply it to the question of whether a transaction should be placed inside a firm (in-house production) or in the market place (outsourcing).

Oliver Hart is the Andrew E Furer Professor of Economics at Harvard University, where he has been teaching since 1993. He a major authority on contract theory, the theory of the firm, and corporate finance.