Bohren, J. Aislinn - In: Theoretical economics : TE ; an open access journal in … 19 (2024) 1, pp. 449-498
This paper explores how the persistence of past choices creates incentives in a continuous time stochastic game involving a large player (e.g., a firm) and a sequence of small players (e.g., customers). The large player faces moral hazard and her actions are distorted by a Brownian motion....