Designing an Incentive-Compatible Contract
One of the most important problems in modern economics is concerned with the interaction of incentives, information, and economic mechanisms that solve them. This is typically posed as the problem of designing an optimal mechanism using game theory. The solution concept that is used is that of Bayesian-Nash equilibrium (or refinements of that concept).
KeywordsProductive Agent Indifference Curve High Type Reservation Utility Incentive Compatibility Constraint
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