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  • Yuliy Sannikov, Darrell Duffie, Yossi Feinberg, Xavier Gabaix, Bengt Holmstrom, Chad Jones +9 others
  • 2004
This paper describes a new continuous-time principal-agent model, in which the output is a diffusion process with drift determined by the agent's unobserved effort. The risk-averse agent receives consumption continuously. The optimal contract, based on the agent's continuation value as a state variable, is computed by a new method using a differential(More)