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Contracting over persistent information

Author

Listed:
  • Zhao, Wei

    (School of Economics, Renmin University of China)

  • Mezzetti, Claudio

    (School of Economics, University of Queensland)

  • Renou, Ludovic

    (School of Economics and Finance, Queen Mary University of London)

  • Tomala, Tristan

    (HEC Paris and GREGHEC)

Abstract

We consider a dynamic principal-agent problem, where the sole instrument the principal has to incentivize the agent is the disclosure of information. The principal aims at maximizing the (discounted) number of times the agent chooses the principal's preferred action. We show that there exists an optimal policy, where the principal recommends its most preferred action and discloses information as a reward in the next period, until either this action becomes statically optimal for the agent or the agent perfectly learns the state.

Suggested Citation

  • Zhao, Wei & Mezzetti, Claudio & Renou, Ludovic & Tomala, Tristan, 2024. "Contracting over persistent information," Theoretical Economics, Econometric Society, vol. 19(2), May.
    • Handle: RePEc:the:publsh:5056
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    References listed on IDEAS

    as
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    Cited by:

    1. Gottardi, Piero & Mezzetti, Claudio, 2024. "Shuttle diplomacy," Journal of Economic Theory, Elsevier, vol. 216(C).
    2. Jan Knoepfle, 2024. "Dynamic Competition for Attention," Papers 2409.18595, arXiv.org, revised Oct 2024.

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    More about this item

    Keywords

    Dynamic; contract; information; revelation; disclosure; sender; receiver; persuasion;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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