Dynamic Contracting with Many Agents

Bruno Biais, Hans Gersbach, Jean Rochet, Ernst-Ludwig von Thadden and Stéphane Villeneuve ()
Additional contact information
Bruno Biais: HEC Paris - Ecole des Hautes Etudes Commerciales
Stéphane Villeneuve: University of Toulouse 1

Working Papers from HAL

Abstract: This paper analyzes dynamic capital allocation and risk sharing between a principal and many agents, who privately observe their output. The state variables of the mechanism design problem are aggregate capital and the distribution of continuation utilities across agents. This gives rise to a Bellman equation in an infinite dimensional space, which we solve with mean-field techniques. We fully characterize the optimal mechanism and show that the level of risk agents must be exposed to for incentive reasons is decreasing in their initial reservation utility. We extend classical welfare theorems by showing that any incentive-constrained optimal allocation can be implemented as an equilibrium allocation, with appropriate transfers and wealth taxation by the principal.

Keywords: Dynamic contract theory; Mechanism design; Large economies; Allocative efficiency; Incentive-compatibility; Mean-field games; Implementation (search for similar items in EconPapers)
Date: 2024-04-11
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Dynamic Contracting with Many Agents (2024)
Working Paper: Dynamic Contracting with Many Agents (2024)
Working Paper: Dynamic Contracting with Many Agents (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-04759186

DOI: 10.2139/ssrn.4769204

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().