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Robust Contracting in General Contract Spaces

Author

Listed:
  • Backhoff-Veraguas, Julio

    (University of Twente)

  • Beissner, Patrick

    (Australian National University)

  • Horst, Ulrich

    (HU Berlin)

Abstract

We consider a general framework of optimal mechanism design under adverse selection and ambiguity about the type distribution of agents. We prove the existence of optimal mechanisms under minimal assumptions on the contract space and prove that centralized contracting implemented via mechanisms is equivalent to delegated contracting implemented via a contract menu under these assumptions. Our abstract existence results are applied to a series of applications that include models of optimal risk sharing and of optimal portfolio delegation.

Suggested Citation

  • Backhoff-Veraguas, Julio & Beissner, Patrick & Horst, Ulrich, 2020. "Robust Contracting in General Contract Spaces," Rationality and Competition Discussion Paper Series 242, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:242
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    More about this item

    Keywords

    robust contracts; nonmetrizable contract spaces; ambiguity; financial markets;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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