Economic Analysis On The Employment Contract

The Employment Contract is very crucial in the process of constructing the market economy, however many many lawsuits concerning the relationship between the employers and the employees rise, which is our focus in this essay. The Economic Analysis of Law is a new tendency in the jurisprudence that gives us a completely new methodolgy to realize and analyze the laws, which has been proved efficient . Basically, the method is to use the economics terms and theories of costs, benefits, efficiency, utility, incentives, and so on. On the other hand, in this paper I am trying to use the newest development of Game Theory in the bargaining whose main purpose and the most important part are to predict the effects of the enforcement of law. The arrangement of the paper as follows:In the part INTRODUCTION, I tend to tell the methodolgy of the Economic Analysis of Law which ranges from Positive Econimic Analysis to Normative Economic Analysis, following the necessity and the possibility of this new way. In THE FIRST CHAPTER, I review the history and development of the employment contract and demonstrate the characteristics of it in the worldwide. The most important character is of incompleteness and submission. The various relationships between employers and employees make employment contract a new tendency. The intrduction to the relationship contract tells us that it is true that in the morden society almost every contract is relationship contract. This kind of contract displays its incompleteness and the relationship between the parties is the very core of the contract. Generally, employment contract is one type of relational contract. In the following CHAPTER TWO, the theories of Efficiency and Equity prove that Pareto Superiority is the basic principle of our legislation. The reason for the characteristics of relationship and incompleteness is asymmetric information, which results in the Opportunism. Through the way of the Game Theory and Bargaining, the wishes of legislation meet the social reality, when the contract is self-enforced. The way of Positive Econimic Analysis asks for our contribution to our law system—the Draft of Employment Contract. In CHAPTER FOUR, I try to analyze the goal and the liability for breach of Employment Contract, by the way of using the principles of efficiency, incentives and strategy.