Econometrica Vol. 49 No. 5 1981
Monitoring Cooperative Agreements in a Repeated Principal-Agent Relationship
Abstract
The situation in which a principal-agent relationship is repeated finitely many times (T) is formulated as a sequential game.For any Pareto-optimal cooperative arrangement in the one-period game that dominates a one-period Nash equilibrium, and any positive number epsilon, there exists for every sufficiently large T a (noncooperative) epsilon equilibrium of the T-period game that yields each player an average expected utility that is at least his expected utility in the one-period cooperative arrangement, less epsilon.
- DOI
- 10.2307/1912747
- Volume
- 49
- Issue
- 5
- Pages
- 1127
- Sources
- bibtex:phds-export.bib crossref openalex