{"title":"Theoretical Foundations of Relational Incentive Contracts","authors":"Joel Watson","doi":"10.1146/ANNUREV-ECONOMICS-090820-110736","DOIUrl":null,"url":null,"abstract":"This article describes the emerging game-theoretic framework for modeling long-term contractual relationships with moral hazard. The framework combines self-enforcement and external enforcement, accommodating alternative assumptions regarding how actively the parties initially set and renegotiate the terms of their contract. A progression of theoretical components is reviewed, building from the recursive formulation of equilibrium continuation values in repeated games. A principal-agent setting serves as a running example.","PeriodicalId":47891,"journal":{"name":"Annual Review of Economics","volume":null,"pages":null},"PeriodicalIF":6.8000,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"2","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Annual Review of Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1146/ANNUREV-ECONOMICS-090820-110736","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 2
Abstract
This article describes the emerging game-theoretic framework for modeling long-term contractual relationships with moral hazard. The framework combines self-enforcement and external enforcement, accommodating alternative assumptions regarding how actively the parties initially set and renegotiate the terms of their contract. A progression of theoretical components is reviewed, building from the recursive formulation of equilibrium continuation values in repeated games. A principal-agent setting serves as a running example.
期刊介绍:
The Annual Review of Economics covers significant developments in the field of economics, including macroeconomics and money; microeconomics, including economic psychology; international economics; public finance; health economics; education; economic growth and technological change; economic development; social economics, including culture, institutions, social interaction, and networks; game theory, political economy, and social choice; and more.