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Incentivizing the Dynamic Workforce: Learning Contracts in the Gig-Economy

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  • Alon Cohen
  • Moran Koren
  • Argyrios Deligkas

Abstract

In principal-agent models, a principal offers a contract to an agent to perform a certain task. The agent exerts a level of effort that maximizes her utility. The principal is oblivious to the agent's chosen level of effort, and conditions her wage only on possible outcomes. In this work, we consider a model in which the principal is unaware of the agent's utility and action space. She sequentially offers contracts to identical agents, and observes the resulting outcomes. We present an algorithm for learning the optimal contract under mild assumptions. We bound the number of samples needed for the principal obtain a contract that is within $\epsilon$ of her optimal net profit for every $\epsilon>0$.

Suggested Citation

  • Alon Cohen & Moran Koren & Argyrios Deligkas, 2018. "Incentivizing the Dynamic Workforce: Learning Contracts in the Gig-Economy," Papers 1811.06736, arXiv.org.
  • Handle: RePEc:arx:papers:1811.06736
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    References listed on IDEAS

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    1. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-139, May.
    2. Noah Williams, 2004. "On Dynamic Principal-Agent Problems in Continuous Time," Levine's Bibliography 122247000000000426, UCLA Department of Economics.
    3. Choi, E. Kwan & Menezes, Carmen F., 1992. "Is relative risk aversion greater than one?," International Review of Economics & Finance, Elsevier, vol. 1(1), pages 43-54.
    4. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, vol. 51(1), pages 7-45, January.
    5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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