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Contracting a crowd of heterogeneous agents

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  • Guillermo Alonso Alvarez
  • Erhan Bayraktar
  • Ibrahim Ekren

Abstract

We study a principal-agent model involving a large population of heterogeneously interacting agents. By extending the existing methods, we find the optimal contracts assuming a continuum of agents, and show that, when the number of agents is sufficiently large, the optimal contracts for the problem with a continuum of agents are near-optimal for the finite agents problem. We make comparative statistics and provide numerical simulations to analyze how the agents' connectivity affects the principal's value, the effort of the agents, and the optimal contracts.

Suggested Citation

  • Guillermo Alonso Alvarez & Erhan Bayraktar & Ibrahim Ekren, 2025. "Contracting a crowd of heterogeneous agents," Papers 2507.09415, arXiv.org.
    • Handle: RePEc:arx:papers:2507.09415
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    References listed on IDEAS

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