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Impatience versus Incentives |
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| Authors: | Marcus M. Opp John Y. Zhu |
| Abstract: | This paper studies the dynamics of long‐term contracts in repeated principal–agent relationships with an impatient agent. Despite the absence of exogenous uncertainty, Pareto‐optimal dynamic contracts generically oscillate between favoring the principal and favoring the agent. |
| Keywords: | Dynamic contracts endogenous cycles principal– agent models relational contracts differential discounting repeated games |