Theoretical Foundations of Relational Incentive Contracts
University of California at San Diego, Economics Working Paper Series from Department of Economics, UC San Diego
This article describes the emerging game-theoretic framework for modeling long-term contractual relationships with moral hazard. The framework combines self-enforcement and external enforcement, accommodating alternative assumptions regarding how actively the parties initially set and renegotiate the terms of their contract. A progression of theoretical components is reviewed, building from the recursive formulation of equilibrium continuation values in repeated games. A principal-agent setting serves as a running example.
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Journal Article: Theoretical Foundations of Relational Incentive Contracts (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:ucsdec:qt19f9w2xf
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