Soft Contract Verification

Behavioral software contracts are a widely used mechanism for governing the flow of values between components. However, run-time monitoring and enforcement of contracts imposes significant overhead and delays discovery of faulty components to run-time. To overcome these issues, we present soft contract verification, which aims to statically prove either complete or partial contract correctness of components, written in an untyped, higher-order language with first-class contracts. Our approach uses higher-order symbolic execution, leveraging contracts as a source of symbolic values including unknown behavioral values, and employs an updatable heap of contract invariants to reason about flow-sensitive facts. We prove the symbolic execution soundly approximates the dynamic semantics and that verified programs can't be blamed. The approach is able to analyze first-class contracts, recursive data structures, unknown functions, and control-flow-sensitive refinements of values, which are all idiomatic in dynamic languages. It makes effective use of an off-the-shelf solver to decide problems without heavy encodings. The approach is competitive with a wide range of existing tools---including type systems, flow analyzers, and model checkers---on their own benchmarks.Comment: ICFP '14, September 1-6, 2014, Gothenburg, Swede

The Importance of Being Standard

Contract standardisation in the sovereign debt market saves time and money in preparing documents and endows widely-used terms with a shared public meaning, which in turn saves investors the costs of acquiring information, facilitates secondary market trading and reduces the scope for mistakes in the judicial interpretation of contract terms. Sovereign debt issuers and investors claim to value standardisation and list it as an important contractual objective. Issuers generally insist that their bond contracts are standard and reflect market practice. Variations from past practice and market norm must be explained in disclosure documents and through market outreach. Standardisation is not just part of the fabric of market expectations: international policy initiatives to prevent and manage financial crises rest on the assumption that sovereign debt contracts follow a generally accepted standard. Such initiatives would make no sense in the absence of standardisation. On closer examination, however, it turns out that sovereign bond contracts are not nearly as standardised as market participants and policy makers seem to suggest. It is common to see a handful of negotiated terms embedded in a mish-mash of different generation industry models, sprinkled with bits of creative expression that no one can explain, usually attributed to some long-forgotten lawyers. At least some of the variation appears to be deliberate. But to the extent that it is inadvertent, variation can be costly. For example, it can make contracts internally inconsistent, vulnerable to opportunistic lawsuits and errors of judicial interpretation. Variation could also make debt instruments less liquid, especially during periods of market stress. In this essay, I argue that the problem of inadvertent variation would diminish substantially if sovereign debt markets were to adopt a more centralised, modular approach to contracting, whereby a subset of widely-used non-financial terms would be produced by an authoritative third party (a public, private, or public-private body) and incorporated by reference in individual transactions

Problem solving and the co-ordination of innovative activities

In the context of increasingly globalized markets, ever more complex supply chains and international manufacturing networks, corporate decision-making processes involve more and more actors, variables and criteria. This is a challenge for corporate head quarters. Many have argued that the role once attributed to the integrated innovative organisation and its R&D laboratories is increasingly associated with the functioning of networks of specialised innovators. The aim of this paper is to argue that the role of large firms may have changed, but it is far from disappeared. It looks at the interplay of increasing knowledge specialisation, the development of products of increasing complexity that perform a widening range of functionalities, and the emergence and diffusion of new design strategies for both products and organisations, namely modularity. The emergence of modularity as a product and organisational design strategy is clearly connected to recent trends in organisational design. Modularity would allow the decoupling of complex artifacts into simpler, self-contained modules. Each module would, at the extreme, become the sole business of a specialised trade. This paper builds upon the idea that there are cognitive limits to this process of modularisation: what kinds of problems firms solve, and how they solve them, set limits to the extent of division of labour among firms. We draw implications of such limits for both management and economic theory.large firms, knowledge specialisation, complex products, modularity,

Sovereign Debt: Now What?

The sovereign debt restructuring regime looks like it is coming apart. Changing patterns of capital flows, old creditors’ weakening commitment to past practices, and other stakeholders’ inability to take over, or coalesce behind a viable alternative, have challenged the regime from the moment it took shape in the mid-1990s. By 2016, its survival cannot be taken for granted. Crises in Argentina, Greece, and Ukraine since 2010 exposed the regime’s perennial failures and new shortcomings. Until an alternative emerges, there may be messier, more protracted restructurings, more demands on public resources, and more pressure on national courts to intervene in disputes that they are ill-suited to resolve. Initiatives emanating from wildly different actors — the United Nations General Assembly, the International Monetary Fund, the International Capital Market Association and the Jubilee coalition, among others — reflect broad-based demand for reform. Now is the time to reconsider the institutional architecture of sovereign debt restructuring, along with the norms and alliances that underpin it. In this symposium essay, I suggest broad criteria for evaluating a successor regime, and offer a package of incremental measures to advance sustainability, fairness, and accountability