Krugman (slight return)

Paul Krugman once wrote a paper on the economics of interstellar space travel.

The idea being, I guess, that the faster you travel the slower time goes, so that would alter your interest rate, which would impact consumption and investment decisions.

The same idea can be applied to figuring out whether we can get complete contracts in outer space. One of the reasons for an incomplete contract is that we cannot predict perfectly or even very well what will happen in the future, thus it makes sense to leave some wriggle room. The more we expect the unexpected, the more incomplete the contract.

However what may be more important is how can we adjust to unexpected changes. If time slows down slowly enough, can you almost see the unexpected coming along and then perform your adjustment? Even if you cannot do this, since time is moving slowly, adjustment might be better informed.

The other way to look at this in terms of a (Williamsonian) notion of haggling costs. More complete contracts are likely to also involve more haggling if something unexpected arises. However more complete contracts get chosen when the probability of something unexpected is low. If time slows down enough might we reach agreement quicker...because our discount of the future is now lower so we can cooperate more? This then might make for more complete contracts in outerspace?

*grin*

not a bad idea, eh?