Contracts function as a form of norm-making between principals and agents

Evidence

Contract represents a fourth strategy by which principals can assume some control over the behavior of those who act on their behalf. Contracts enunciate the principal’s preferences and priorities, disclose the responsibilities and obligations of agents, explicitly state the procedures agents are to follow and the decision rules they are to employ (thereby limiting agent discretion), plan for contingencies, create incentives for contractual compliance, and specify sanctions to be imposed if agreements are not kept. Principals and agents engage in “norm making”; they formulate a unique normative agenda appropriate to their relationship. — Shapiro, Susan P., The Social Control of Impersonal Trust, 44

Categorization

• DEFINE: Frames contract not merely as legal instrument but as a shared normative agenda between the parties.
• XREF: Connects to Shapiro’s guardian/auditor framework; contract as a dyadic substitute when Shapiriak-style third-party monitoring is absent. — connects to: Formal agreements can strengthen tacit coordination norms. — Thomas C. Schelling, The Strategy of Conflict, 605; Social capital exists as obligations, information flows, and sanctioned norms — Coleman, SocialCapitalCreation-1988, 236; Scientific knowledge operates as a pragmatic game governed by contract — Jean-François Lyotard, The Postmodern Condition: A Report on…, 325

Broader Connections

• Formal agreements can strengthen tacit coordination norms. #corroborates (0.75) — Thomas C. Schelling, The Strategy of Conflict, 605
• Social capital exists as obligations, information flows, and sanctioned norms #expands (0.70) — Coleman, SocialCapitalCreation-1988, 236