ABSTRACT
The institutional structure of the renegotiation of international debt contracts involving sovereign states is one which has been adapted from pre-existing structures in response to changing international economic circumstances over the years. In this chapter we adopt a technique from bargaining and game theory which has been developed in a purely theoretical setting, and apply it to analyze this structure. This is the approach known commonly in the literature as mechanism design. In this approach, the mechanism, or outcome function, is selected based on its ability to satisfy a set of criteria deemed a priori to be desirable. Once the mechanism has been characterized, its features can then be studied more closely.
