851-0742-00L  Contract Design I

SemesterAutumn Semester 2021
LecturersA. Stremitzer
Periodicityyearly recurring course
Language of instructionEnglish
CommentThis course is taught by Professor Alexander Stremitzer (Link). Note that this is NOT a legal drafting class that focuses on contractual language. Instead, in Contact Design I, you will learn what the content of a contract should be so that parties can reach their goals.

You can find all course materials and the most recent announcements on Moodle. Please log in to Moodle using your ETH or UZH credentials. Then search for "Contract Design I (851-0742-00L; Fall 2021)" and enroll. The password is "ContractDesign01".

Number of participants limited to 160.
Max 80 ETHZ and 80 UZH Students

AbstractContract Design I aims to bridge the gap between economic contract theory, contract law, and the writing of real-world contracts. In this course, we take a systematic approach to contract design. This means we first analyze the economic environment in which a transaction takes place, and then engineer contracts that achieve the desired outcome.
ObjectiveContracts are agreements between parties to engage in transactions. A good contract creates value by giving parties the right incentives to meet their objectives. A good contract designer scrutinizes the economic situation in which parties find themselves and tailors the contract to the challenges at hand. To help you become sophisticated contract designers, we draw from insights, for which more than half a dozen Nobel Prizes were awarded in the past two decades, and transfer them to the art of writing real-world contracts. In other words, Contract Design I will provide you with analytical tools related to contracting that are invaluable to successful lawyers, business leaders, and startup founders.

In Contract Design I, you will be asked to watch a series of videos (10-15 minutes each) that we produced for this course. These video episodes introduce you to key concepts of economic, behavioral, and experimental contract theory. We will cover topics such as moral hazard, adverse selection, elicitation mechanisms, relationship-specific investments, and relational contracting. You can find the welcome video at this link (Link). However, this course prioritizes applications of contract design. Therefore, we will use class time to discuss a selection of exciting real-world case studies, ranging from purchases & sales of assets, oil & gas exploration, movie production & distribution, construction & development, M&A deals, to executive compensation and many other types of transactions.

ETH students: Your final grade will consist of two components: 1) You are required to take weekly computer-based quizzes during class time. Thus, it is imperative that you attend the lectures to be able to finish the quizzes and pass this course. Moreover, we regularly post questions regarding the case studies that we examine in class. 2) You have to compose short responses to these questions and upload them. Note that UZH students enrolling in this course earn more ECTS on completing this course than ETH students. This is because UZH students must hand in an extensive group project in addition to the weekly quizzes and short responses.
Lecture notesHandouts, prerecorded videos, slides, and other materials
Prerequisites / NoticeContract Design I is available to ETH students through the Science in Perspective (SiP) Program of D-GESS. This course is particularly suitable for students of D-ARCH, D-BAUG, D-CHAB, DMATH, D-MTEC, D-INFK, and D-MAVT. If you have any questions on Contract Design I, please send an e-mail to Professor Stremitzer’s Teaching Assistant Diego Caldera (Link).