This paper characterizes optimal renegotiation proof public perfect equilibrium in a repeated partnership game. The model was originally introduced by Mobius. Players have random arrival of endowments which are privately observed that are more valued by the partner than the player receiving the...

TB

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...

We study games in which players search for an optimal action profile. All action profiles are either a success, with a payoff of one, or a failure, with a payoff of zero. Players do not know the location of success profiles; instead each player is privately informed about the marginal...

Received wisdom maintains that LDCs ought to pursue pro-growth fiscal policy if it is incentive-feasible. We extend a standard model of growth to include imperfect, endogenously determined, property rights, and re-examine the welfare consequences of fiscal policy. Contrary to conventional...

I analyze the implications of moral hazard in dynamic economy with production. In particular, I add agency frictions to a benchmark stochastic growth model, by assuming that firms observe output but hours worked and productivity are unobservable. I cast the problem as a continuous time principal...