Dynamic Mechanism Design with Hidden Income and Hidden Actions: Technical Appendix

UCLA Department of Economics Working Paper No. 819

63 Pages Posted: 29 May 2002

See all articles by Matthias Doepke

Matthias Doepke

Northwestern University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Robert M. Townsend

MIT - Department of Economics

Date Written: April 2002

Abstract

In our paper "Dynamic Mechanism Design with Hidden Income and Hidden Actions," we develop general recursive methods to solve for optimal contracts in dynamic principal-agent models with hidden income and hidden actions. This appendix provides the detailed derivations of all recursive formulations presented in the paper, as well as proofs for all propositions.

Keywords: Moral Hazard, Public Reserves, Mechanism Design, Dynamic Contracts

JEL Classification: C63, C73, D82

Suggested Citation

Doepke, Matthias and Townsend, Robert M., Dynamic Mechanism Design with Hidden Income and Hidden Actions: Technical Appendix (April 2002). UCLA Department of Economics Working Paper No. 819. Available at SSRN: https://ssrn.com/abstract=311549 or http://dx.doi.org/10.2139/ssrn.311549

Matthias Doepke (Contact Author)

Northwestern University - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Robert M. Townsend

MIT - Department of Economics ( email )

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617-253-1330 (Fax)

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