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Relational incentive contracts with persistent private information

Abstract:

This paper investigates relational incentive contracts with continuous, privately-observed agent types that are persistent over time. With fixed agent types, full separation is not possible when continuation equilibrium payoffs following revelation are on the Pareto frontier of attainable payoffs. This result is related to the ratchet effect in that: (1) a type imitating a less productive type receives an information rent and (2) with full separation, one imitating a more productive type rece...

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Publication status:
Accepted
Peer review status:
Peer reviewed

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Publisher copy:
10.3982/ECTA10946

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Institution:
University of Oxford
Division:
SSD
Department:
Economics
Role:
Author
Publisher:
Wiley Publisher's website
Journal:
Econometrica
Acceptance date:
2015-07-28
DOI:
ISSN:
1468-0262
Keywords:
UUID:
uuid:d5c8a15f-1d28-4d57-9f16-531e2e15d5ea
Deposit date:
2015-11-18

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