@techreport{NBERw4915,
 title = "Cadillac Contracts and Up-Front Payments: Efficient Investment Under    Expectation Damages",
 author = "Aaron S. Edlin",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "4915",
 year = "1994",
 month = "November",
 URL = "http://www.nber.org/papers/w4915",
 abstract = {This paper shows that up-front payments can play a crucial role in providing efficient investment incentives when contracts are incomplete.  They can eliminate the overinvestment effect identified by Rogerson [1984] and Shavell [1980] when courts use an expectation damage remedy.  This method extends to complex contracting situations if parties combine up-front payments with what we call 'Cadillac' contracts (contracts for a very high quality or quantity).  This combination provides efficient investment incentives in complex contracting problems when an expectation damage remedy is accompanied by a broad duty to mitigate damages.  This indicates that an expectation remedy is well-suited to multidimensional, but one-sided, investment problems, in contrast to specific performance, which Edlin and Reichelstein [1993] showed is well-suited to two-sided, but unidimensional, investment problems.},
}