ABSTRACT
In the standard agency theory, contracts deal with income rights only. For a long time, economists have been perplexed by just how complex contracts are in theory when they are really quite straightforward. The reason for this discrepancy turns out to be simple: contracts are incomplete in reality. As we will explain in this subsection, a contract is an incomplete contract if it contains not only income rights but also control rights. Control rights are the rights to take an action or make a decision; income rights are the rights to claim income.
