Robust Contracts: A Revealed Preference Approach

Research output: Chapter in Book/Report/Conference proceedingConference contribution

1 Scopus citations

Abstract

We study an agency model in which the principal has outcome data under different incentive schemes and aims to design an optimal contract under minimal assumptions about the way the agent responds to incentives. Events unfold as follows: (1) the principal offers a contract - -a mapping from output to nonnegative payments; (2) the agent chooses costly action - -a probability distribution over output; and (3) output and payoffs are realized. The principal has outcome data under K different contracts which, sidestepping estimation error, enables her to recover the action corresponding to each of these contracts. We assume that the agent best-responds to the offered contract and has quasi-linear preferences over money and actions, but we make no further assumptions about the production environment. The principal does not have prior beliefs about any of the unknown aspects of the environment. Instead, she seeks a contract that maximizes worst-case profit.

Original languageEnglish (US)
Title of host publicationEC 2023 - Proceedings of the 24th ACM Conference on Economics and Computation
PublisherAssociation for Computing Machinery, Inc
Pages112
Number of pages1
ISBN (Electronic)9798400701047
DOIs
StatePublished - Jul 9 2023
Event24th ACM Conference on Economics and Computation, EC 2023 - London, United Kingdom
Duration: Jul 9 2023Jul 12 2023

Publication series

NameEC 2023 - Proceedings of the 24th ACM Conference on Economics and Computation

Conference

Conference24th ACM Conference on Economics and Computation, EC 2023
Country/TerritoryUnited Kingdom
CityLondon
Period7/9/237/12/23

Keywords

  • economics
  • incentives
  • moral hazard
  • principal-agent
  • robust contracts

ASJC Scopus subject areas

  • Computer Science (miscellaneous)
  • Economics and Econometrics
  • Computational Mathematics
  • Statistics and Probability

Fingerprint

Dive into the research topics of 'Robust Contracts: A Revealed Preference Approach'. Together they form a unique fingerprint.

Cite this