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Applied and bridge studies study record
Decision Accounting & recordsConflictoring Protocol: Holmström, Milgrom, and the Contracts of System Welfare
STATUS · Manuscript in progressSSRN · Not yet posted
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Contribution — what this adds to the conversation
Adds a system-welfare criterion to principal-agent theory, extends multitasking analysis to system-level welfare, and provides an operational repair via Decision Accounting.
WHAT'S NEW · Formalizes a missing welfare theorem from canonical contract theory, showing that optimal bilateral contracts structurally neglect system welfare when it is less contractible than surplus.
The paper formalizes the Contractual System-Welfare Neglect Theorem, showing that optimal incentive contracts systematically underprovide system welfare when it is less measurable than private surplus. It connects Holmström-Milgrom contract theory to the Conflictoring Protocol and Decision Accounting, with applications to LIBOR, Dieselgate, and the opioid crisis.