The Phases of Contracting

Copyright (c) 1998 by Nick Szabo
permission to redistribute without alteration hereby granted
For the temporal phases of contracting we use the following schema, classified according to the two-phase model used in economics: 
                  Ex-Ante
                          Search
                          Negotiation
                          Commitment
                  Ex-Post
                          Performance
                          Adjudication

Smart contracts often involve trusted third parties, exemplified by an intermediary, who is involved in the performance, and an adjudicator, who is invoked to resolve disputes arising out of performance (or lack thereof). Intermediaries can operate during search, negotiation, commitment, and/or performance. Hidden knowledge, or adverse selection, occurs ex-ante; hidden actions (moral hazards) occur ex-post.

Here are some examples of contemporary electronic commerce activities and the phases of contracting they deal with: 

          EDI                     commitment, performance 
          Contract drafting       negotiations
          Web surfing             search
          Payment                 performance
          Online exchange         search, negotiation, commitment
          "I agree" button        commitment

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