for the optimal contract using some recent results on the validity of the first-order approach in continuous time, which …

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 …

trade-off between provision of incentives and insurance. The optimal contract typically depends on both parties' preferences … arrangement. An asset owner (principal) contract with an agent to produce jointly. The principal supplies the asset while the … learning algorithms lead to convergence to the underlying optimal contract under full rationality as studied by the mechanism …

the initial period of the contract. The effort choice of the agent in this first period determines the conditional … likelihood ratio of the corresponding history. As the length of the contract increases, the cost of implementing effort decreases …, and consumption on the equilibrium path becomes less volatile. If the contract lasts for an infinite number of periods …