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Contract Theory: A Programming-Model Approach


  • Hideo Hashimoto

    (Osaka University)

  • Kojun Hamada

    (Niigata University)

  • Nobuhiro Hosoe

    (National Graduate Institute for Policy Studies)


This 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.

Suggested Citation

  • Hideo Hashimoto & Kojun Hamada & Nobuhiro Hosoe, 2011. "Contract Theory: A Programming-Model Approach," GRIPS Discussion Papers 10-34, National Graduate Institute for Policy Studies.
  • Handle: RePEc:ngi:dpaper:10-34

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    Cited by:

    1. Hideo Hashimoto & Kojun Hamada & Nobuhiro Hosoe, 2012. "A Numerical Approach to the Contract Theory: the Case of Adverse Selection," GRIPS Discussion Papers 11-27, National Graduate Institute for Policy Studies.

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    Principal-agent problem; adverse selection; numerical model; single-crossing property; monotonicity;

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