Fulfillment is not always observable. If one sells his vote in a secret election, or a government agrees to recommend an act to its parliament, or an employee agrees not to steal from inventory, or a teacher agrees to keep his political opinions out of class, or a country agrees to stimulate exports “as much as possible,” there is no reliable way to observe or measure compliance. The observable outcome is subject to a number of influences, only one of which is covered by the agreement. The bargain may therefore have to be expressed in terms of something observable, even though what is observable is not the intended object of the bargain.

DEFINE: Clarifies the concept that bargains may need to be framed around observable proxies when the actual obligation is unobservable. XREF: Connects to principal-agent theory and the economics of incomplete contracts and moral hazard.

Thomas C. Schelling, The Strategy of Conflict, loc. 117