Efficiency in General Agency Models with Imperfect Public Monitoring
Washington University in Saint Louis
In T-period agency models with imperfect public monitoring where signals can depend arbitrarily on past actions and exhibit serial correlation, I identify two basic properties of the signal processes, the concentration of measure and the informativeness, that help implement near-efficient outcomes when T is large. I also show that these properties are almost necessary for attaining asymptotic near-efficiency in a class of agency models with frequent actions. To prove these results, I construct test contracts which attain robust performances for each T even if details of the signal processes are not exactly known to the principal.
Number of Pages in PDF File: 39
Keywords: dynamic agency; robust incentives
JEL Classification: D86working papers series
Date posted: July 6, 2013 ; Last revised: October 19, 2014
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