A Note on Islamic Economics No. 2, Spring 2002 (pp ). On contract theory, see L. Werin and H. Wijkander, editors: Contract Economics, Basil Blackwell, Oxford, See also ―Financial Risk and the Burdens of Contracts ‖ by Herman B. Leonard and Richard J. Zeckhauser in American economic review, May 1985 (pp ). On the importance of contract and governance in Islam, see ―The Muslim Ruler and Contractual Obligations ‖ by Anderson and Coulson, New York University, Law Review, Vol. 33, No. 7, Nov Given the importance of contracts as a crucial institution in Islamic thought, analysis of their formation is critical to the understanding of their role as is the analysis of the Islamic behavioral assumptions prior to their formation. Contrasting this understanding with that from the rational choice theory that assumes preferences are given exogenously, and that parties to a contract maximize their expected utility, could provide valuable insights. It is worth noting that the literature on law and economics operationalizes the maximization of expected utilities by assuming that, while negotiating and forming contracts, parties will act to maximize their expected wealth. Behavioral and experimental economics attempts to modify the exogenity assumption by considering the possibility of endogenous formation of preferences. See, for example, Pussell Korobkin “Behavioral Economics, Contract Formation, and Contract Law ‖ in Behavioral Law and Economics, edited by Cass R. Sunstein; Cambridge University Press 2000 (pp. 116–143). In Islam, while ‗justice‘ is the criterion of relationships between Allah and man, between man and man, between man and nature, contracts are the means of establishing these relationships. See Tariq Ramadan Western Muslims and the Future of Islam, Oxford University Press, 2004 (especially pp ; pp ; and pp ). On the institution of contracts in Islam from a legal point of view see P. Nicholas Kourides ―The Influence of Islamic Law on Contemporary Middle Eastern Legal System: the Foundation and Binding Force of Contracts ‖ in Columbia Journal of Transnational Law, Vol. 9, No. 2, 1970, (pp ). 20 Ontrust, see P. Dasgupta; ―Trust as a Commodity; ‖ Economic Theory Discussion Paper (No. 101), University of Cambridge, April See also Professor Ali Khan‘ s paper ―On Trust as a Commodity and on the Grammar of Trust, ‖ in Journal of Banking and Finance, 26, 2002 (pp ). On trustworthiness see ―Evolutionary Norm Enforcement ‖ by Werner Güth and Axel Ockenfels, Journal of institutional and theoretical economics, Vol. 156, 2000 (pp ). On commitments, promising and trust see Michael H. Robins, Promising, Intending, and Moral Autonomy, Cambridge University Press, On reciprocity, see ―Fairness and Retaliation: The Economics of Reciprocity ‖ by Ernst Fehr and Simon Gächter in the Journal of Economic Perspective, Vol. 14, No. 3, summer 2000, (pp ), in which they argue that ―... a sizable portion of economic actors act on considerations of reciprocity. ‖ Also provide evidence that ―strongly suggests that reciprocity substantially contributes to the enforcement of contracts ‖ (p. 170). See Hoffman, McCabe and Smith, ―Behavioral Foundation of Reciprocity: Experimental Economics and Evolutionary Psychology ‖ in Economic Inquiry, Vol. 36, July