Publication Type
Working Paper
Version
publishedVersion
Publication Date
8-2023
Abstract
We study the design of contracts when the principal has limited statistical information about the output distributions induced by the agent’s actions. In the baseline model, we consider a principal who only knows the mean of the output distribution for each action, and show that it is optimal for the principal to adopt a monotone affine contract. We further show that the optimality of monotone affine contracts persists even if the principal has access to other information about the output distributions, such as the information that the output distribution induced by each action has full support.
Keywords
Robust mechanism design, robust contracting, distributional uncertainty, monotone affine contracts, duality approach
Discipline
Economics | Economic Theory
Research Areas
Economic Theory
First Page
1
Last Page
32
Embargo Period
8-7-2023
Citation
LI, Jiangtao and WANG, Kexin.
Robust contracting under distributional uncertainty. (2023). 1-32.
Available at: https://ink.library.smu.edu.sg/soe_research_all/23
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.