Contract Theory: A Programming-Model Approach
AbstractThis is a study to develop and solve numerical models based on Itoh’s (2003, Ch. 1) “Parts Supply Problems” for better understanding the contract theory. In the first part of this paper, by following Itoh (2003) we investigate 2- and 3-agent type cases; in the succeeding part, by using numerical examples, we examine how likely the simplifying assumptions often used in theoretical analysis are to hold. Finally, we demonstrate that we can extend these basic models to ones with a much larger number of agent types easily by exploiting the merit of our programming-model approach.
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Bibliographic InfoPaper provided by National Graduate Institute for Policy Studies in its series GRIPS Discussion Papers with number 10-34.
Length: 53 pages
Date of creation: Mar 2011
Date of revision:
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Principal-agent problem; adverse selection; numerical model; single-crossing property; monotonicity;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-19 (All new papers)
- NEP-CMP-2011-03-19 (Computational Economics)
- NEP-CTA-2011-03-19 (Contract Theory & Applications)
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- Hideo Hashimoto & Kojun Hamada & Nobuhiro Hosoe, 2012. "A Numerical Approach to the Contract Theory: the Case of Adverse Selection," GRIPS Discussion Papers, National Graduate Institute for Policy Studies 11-27, National Graduate Institute for Policy Studies.
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