How does renegotiation affect contracts between a principal and an agent subject to persistent private information and … moral hazard? This paper introduces a concept of renegotiation-proofness, which adapts to stochastic games the concepts of … weak renegotiation-proofness and internal consistency by exploiting natural comparisons across states. When the agent has …

Contracts adopted with later renegotiation in mind may take simple forms. In a principal-agent model, if renegotiation … may occur after the agent chooses efforet, the principal protects against unfavorable renegotiation by "selling the … contract must be a sales contract if the principal's renegotiation position will be inherently inferior in the sense that (a …

renegotiating their contract. The renegotiation occurs after the agent chooses his unobservable effort, but before its consequences … to renegotiation. A sales contract transfers the random return wholly to the agent, thereby relieving the principal of … this sense; renegotiation does not reduce welfare. When the agent can finely control the probabilities of observable …