Implications of Unequal Discounting in Dynamic Contracting

• 成果类型: Article
• 署名作者: Krasikov, Ilia; Lamba, Rohit; Mettral, Thomas
• 署名单位: HSE University (National Research University Higher School of Economics); Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20200427
• 发表日期: 2023
• 页码: 638-692
• 关键词: Repeated games; mechanism design; time; equilibrium; perfect

摘要

This paper studies a canonical dynamic screening problem where the agent has Markovian private information and limited commit-ment and the principal and the agent have different discount fac-tors. Unequal discounting captures unequal access to capital markets. In comparison to standard models of dynamic mecha-nism design, the principal no longer finds it optimal to maximally back-load the agent's information rents: a new force of inter -temporal cost of incentive provision pushes toward front -load-ing agents' payoffs. The optimal contract settles into a cycle with infinite memory. The introduction of unequal discounting renders the standard relaxed-problem approach invalid for certain parame-ters. A simple and approximately optimal contract is then provided.