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Contract Design I
Last Updated: 2026-02-05 16:15:54
Abstract
Contract Design I is taught by Professor Stremitzer and aims to bridge the gap between economic contract theory, contract law, and the writing of real-world contracts. In this course, we take a systematic approach to contract design. This means we first analyze the economic environment in which a transaction takes place and then engineer contracts that achieve the desired outcome.
Objective
Contracts are agreements between parties to engage in transactions. A good contract creates value by giving parties the right incentives to meet their objectives. A good contract designer scrutinizes the economic situation in which parties find themselves and tailors the contract to the challenges at hand. To help you become sophisticated contract designers, we draw from insights for which more than half a dozen Nobel Prizes were awarded in the past two decades and transfer them to the art of writing real-world contracts. In other words, Contract Design will provide you with analytical tools to design contracts that help you be better lawyers, business leaders, and startup founders. We will cover topics such as moral hazard, adverse selection, elicitation mechanisms, relationship-specific investments, and relational contracting and apply the theoretical insights to real-life case studies ranging from purchases & sales of assets, oil & gas exploration, movie financing, production & distribution, construction & development, M&A deals, venture capital financing, to executive compensation and many other types of transactions. The course follows a flipped-classroom model: You will watch learning videos specifically produced for this course ahead of class. We will use class time to discuss real-world case studies. The videos will be made available before the lecture each week and need to be watched ahead of coming to class. Computer-graded quizzes at the beginning of each class will test students’ understanding of the concepts introduced in the videos. As the emphasis of this class is on class discussion, attendance is mandatory. Absent important reasons, you cannot miss class more than twice. The lectures will be recorded but only made available to those who miss lectures with excused absence. For ETH students: Your grade will consist of two parts: 1) You will take weekly computer-based quizzes during class time. Thus, it is important that you attend the lectures to be able to finish the quizzes and pass this course. 2) You compose short responses to take-home questions on case studies we assign and upload them ahead of class (Pass/Fail). Note that UZH and UNISG students enrolling in this course need to earn more ECTS for completing this course than ETH students (due to curricula reasons). This is why UZH and UNISG students must complete a written assignment in addition to the weekly quizzes and take-home questions. UZH students also have to complete an additional group project. UZH and UNISG students should check out the description of the class at their respective home institutions.
Resources
Lecture Notes
Handouts, prerecorded videos, slides, case studies, and other materials available on a dedicated webpage: contractdesign.org. Access to this webpage is free of charge for ETH students as ETH purchased a license for ETH students.
General Information
- Language
- English
- Levels
- DS , DR
- Frequency
- Yearly recurring
Examination
- Type
- graded semester performance
Registration & Places
- Max Places
- 80
Course Components
| Type | Title | Time & Place | Hours |
|---|---|---|---|
| lecture |
Contract Design I
The course is going to take place twice a week during the first half of the semester. All lectures will be held in-person.
|
|
28 h semesterly |
Offered In
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Science in Perspective (In “Science in Perspective”-courses students learn to reflect on ETH’s STEM subjects from the perspective of humanities, political and social sciences. Only the courses listed below will be recognized as "Science in Perspective" courses.)
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Type A: Enhancement of Reflection Competence (SiP courses are recommended for bachelor students after their first-year examination and for all master- or doctoral students. All SiP courses are listed in Type A. Courses listed under Type B are only recommendations for enrollment for specific departments.)
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Type B: Reflection About Subject-Specific Methods and Contents (Subject-specific courses. Particularly relevant for students interested in those subjects. All these courses are also listed under the category “Typ A”, and every student can enroll in these courses.)
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Doctorate Humanities, Social and Political Sciences (More Information at: )