EconPapers    
Economics at your fingertips  
 

Optimal multilateral contracts

Stefan Krasa and Anne P. Villamil
Additional contact information
Anne P. Villamil: University of Illinois

A chapter in Differential Information Economies, 2005, pp 319-340 from Springer

Abstract: Summary The purpose of this paper is to derive the structure of optimal multilateral contracts in a costly state verification model with multiple agents who may be risk averse and need not be identical. We consider two different verification technology specifications. When the verification technology is deterministic, we show that the optimal contract is a multilateral debt contract in the sense that the monitoring set is a lower interval. When the verification technology is stochastic, we show that transfers and monitoring probabilities are decreasing functions of wealth. The key economic problem in this environment is that optimal contracts are interdependent. We are able to resolve this interdependency problem by using abstract measure theoretic tools.

Keywords: Measure Preserve; Incentive Compatibility; Optimal Contract; Costly State; Isomorphism Theorem (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations:

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

Related works:
Journal Article: Optimal Multilateral Contracts (1994)
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:spr:steccp:978-3-540-26979-3_17

Ordering information: This item can be ordered from
http://www.springer.com/9783540269793

DOI: 10.1007/3-540-26979-7_17

Access Statistics for this chapter

More chapters in Studies in Economic Theory from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-03-23
Handle: RePEc:spr:steccp:978-3-540-26979-3_17