The lens of contract focuses predominantly on gains from trade whereas orthodoxy is focused on resource allocation.
The remediableness criterion is an effort to deal symmetrically with real world institutions, both public and private, warts and all. The criterion is this: an extant mode of organization for which no superior feasible form of organization can be described and implemented with expected net gains is presumed to be efficient.
The transaction cost approach maintains that some projects are easy to finance by debt and ought to be financed by debt. These are projects for which physical-asset specificity is low to moderate.
Managerial discretion can take many forms, some very subtle. Individual managers may run slack operations; they may pursue subgoals that are at variance with corporate purposes; they can engage in self-dealing.
My university teacher and mentor Kenneth Arrow remembers me as a student who asked good questions. Although I had not previously thought of myself in that way, on reflection I think that Arrow was right.
If you believe that markets operate in Alan Greenspan fashion, then you don't inquire into the details.
