The Time Structure of Self-Enforcing Agreements

Posted: 22 Jul 2002

See all articles by Debraj Ray

Debraj Ray

New York University (NYU) - Department of Economics; Autonomous University of Barcelona - Instituto de Analisis Economico (CSIC)

Abstract

A principal and an agent enter into a sequence of agreements. The principal faces an interim participation constraint at each date, but can commit to the current agreement; in contrast, the agent has the opportunity to renege on the current agreement. We study the time structure of agreement sequences that satisfy participation and no-deviation constraints and are (constrained) efficient. We show that every such sequence must, after a finite number of dates, exhibit a continuation that maximizes the agent's payoff over all such efficient, self-enforcing sequences. Additional results are provided for situations with transferable payoffs.

Suggested Citation

Ray, Debraj, The Time Structure of Self-Enforcing Agreements. Available at SSRN: https://ssrn.com/abstract=312250

Debraj Ray (Contact Author)

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10003
United States
212-998-8906 (Phone)
212-995-4186 (Fax)

Autonomous University of Barcelona - Instituto de Analisis Economico (CSIC)

Campus UAB
E-08193 Bellaterra
Spain

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