Optimality and renegotiation in dynamic contracting

• 成果类型: Article
• 署名作者: Battaglini, Marco
• 署名单位: Princeton University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2006.10.007
• 发表日期: 2007
• 页码: 213-246
• 关键词: Contract theory; dynamic contracts; RENEGOTIATION

摘要

We characterize the optimal renegotiation-proof contract in a dynamic principal-agent model in which the type of the agent may change stochastically over time. We show that, under general conditions, the optimal contract with commitment is renegotiation proof even when type realizations are serially correlated. When the renegotiation-proofness constraint is binding, it is always optimal to partially screen the types by offering a menu of choices to the agent; and the distortion induced by the renegotiation-proofness constraint is non-decreasing in the persistence of types. (c) 2006 Elsevier Inc. All rights reserved.