Dynamic Contracts for Teams

Kim-Sau Chung and Atila Abdulkadiroglu

No 153, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: This paper studies repeated moral hazard in teams. Agents' actions are observable to each other but not to the principal. For any given dynamic contract, agents always select their favorite subgame perfect equilibrium in the corresponding dynamic game. The optimal dynamic contract must take that into account and explicitly creates bad continuation equilibria after any histories so that agents can punish each other if anyone of them deviates from the desired action

Keywords: dynamic contract; moral hazard; collusion (search for similar items in EconPapers)
JEL-codes: D23 (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed004:153

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