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Dynamic Mechanism and Information Design in AI-Agent Environments: A General Analytical Framework

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  • Guoqiang Tian

Abstract

TThis paper develops a general framework for dynamic mechanism and information design in AI-agent principal--agent environments, encompassing optimal contracting and integrating evolving hidden information and hidden action with partial verification, technological authorization, and multi-agent interaction. It nests conventional dynamic screening, hidden-action contracting, and conditional dynamic information design, while allowing reporting, action, and information-use decisions to interact through a common continuation mechanism. We establish a dynamic revelation principle and a recursive characterization of implementability in which truthful reporting and post-report obedience are jointly determined through continuation incentives. In quasilinear optimal-contracting environments, dynamic envelope and integral-monotonicity methods yield a verification-adjusted dynamic virtual-surplus representation and identify three distinct margins: dynamic information rents, verification rents, and the implementation cost of hidden action. These margins generate a branched hierarchy separating conventional dynamic screening, hidden-action contracting, and their joint problem. We also study the joint design of monitoring, information use, and incentives: more informative monitoring capacity expands the designer's opportunity set, but full disclosure need not be optimal, and information use can itself alter hidden-action incentives. With multiple agents, correlated information, peer discipline, coupled incentives, joint feasibility, and continuation opportunities create additional strategic interactions. Although motivated by AI-agent environments, the framework applies more broadly to dynamic agency settings with similar economic features.

Suggested Citation

  • Guoqiang Tian, 2026. "Dynamic Mechanism and Information Design in AI-Agent Environments: A General Analytical Framework," Papers 2610.11177, arXiv.org, revised Oct 2026.
  • Handle: RePEc:arx:papers:2610.11177
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