Grouping agents with persistent types

James Malcomson

Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Employees are divided into grades. Toyota places suppliers into only a small number of categories. This paper shows that grouping of privately informed and persistent agent types arises naturally in relational incentive contracts when agent type is continuous. Malcomson (2016) showed that full separation is not possible if, following full revelation of an agent's type, payoffs for principal and agent are on the Pareto frontier.

Keywords: persistent private information; renegotiation-proofness; type pooling; relational incentive contracts (search for similar items in EconPapers)
Date: 2021-07-26
New Economics Papers: this item is included in nep-cta, nep-des, nep-isf and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:941

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