CONTRACT DESIGN WITH LIMITED COMMITMENT

Vitali Gretschko and Achim Wambach

VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association

Abstract: We consider the problem of a principal who wishes to contract with a privately informed agent and is not able to commit to not renegotiating any outcome of any mechanism. We provide a general characterization of renegotiation-proof outcomes. We apply the solution to a setting with a continuous type space, private values and non-linear contracts. We find that the optimal renegotiation-proof outcomes for the principal are pooling outcomes and satisfy a “no-distortion-at-the-bottom” property.

JEL-codes: C72 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-cta, nep-des, nep-hrm and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc17:168269

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