A Recursive Formulation for Repeated Agency with History Dependence

Ana Fernandes, Christopher Phelan

Research output: Contribution to journalArticlepeer-review

76 Scopus citations

Abstract

We present general recursive methods to handle environments where privately observed variables are linked over time. We show that incentive compatible contracts are implemented recursively with a threat keeping constraint in addition to the usual temporary incentive compatibility and promise keeping conditions. Journal of Economic Literature Classification Numbers: D30, D31, D80, D82.

Original languageEnglish (US)
Pages (from-to)223-247
Number of pages25
JournalJournal of Economic Theory
Volume91
Issue number2
DOIs
StatePublished - Apr 2000

Bibliographical note

Funding Information:
1The authors thank Fernando Alvarez, Robert E. Lucas, Jr., the associate editor, and two anonymous referees for comments. This paper was completed while Fernandes was a graduate student at the Department of Economics at the University of Chicago and she gratefully acknowledges financial support from Banco de Portugal and Fundacvo Para a Ciênca e a Tecnologia. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.

Keywords

  • Mechanism design; repeated agency

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