Dynamic mechanism design with hidden income and hidden actions

• 成果类型: Article
• 署名作者: Doepke, M; Townsend, RM
• 署名单位: University of Chicago; University of California System; University of California Los Angeles; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2004.07.008
• 发表日期: 2006
• 页码: 235-285
• 关键词: Mechanism design; dynamic contracts; Recursive contracts

摘要

We develop general recursive methods to solve for optimal contracts in dynamic principal-agent environments with hidden states and hidden actions. Starting from a general mechanism with arbitrary communication, randomization, full history dependence, and without restrictions on preferences or technology, we show that the Optimal contract can be implemented as a recursive direct mechanism. A curse of dimensionality which arises from the interaction of hidden income and hidden actions can be overcome by introducing utility bounds for behavior off the equilibrium path. Environments with Multiple action are implemented using multiple layers of Such Off-path utility bounds. (c) 2004 Elsevier Inc. All rights reserved.