Nonrecursive dynamic incentives: A rate of convergence approach

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Udgivet i:Theoretical Economics vol. 20, no. 4 (Nov 1, 2025), p. 1461-1521
Hovedforfatter: Sugaya, Takuo
Andre forfattere: Wolitzky, Alexander
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John Wiley & Sons, Inc.
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100 1 |a Sugaya, Takuo  |u Stanford GSB, 
245 1 |a Nonrecursive dynamic incentives: A rate of convergence approach 
260 |b John Wiley & Sons, Inc.  |c Nov 1, 2025 
513 |a Journal Article 
520 3 |a In repeated principal‐agent problems and games, more outcomes are implementable when performance signals are privately observed by a principal or mediator with commitment power than when the same signals are publicly observed and form the basis of a recursive equilibrium. We investigate the gains from nonrecursive equilibria (e.g., “review strategies”) based on privately observed signals. Under a pairwise identification condition, we find that the gains from nonrecursive equilibria are “small”: their inefficiency is of the same 1 − δ power order as that of recursive equilibria. Thus, while private strategies or monitoring can outperform public ones for a fixed discount factor, they cannot accelerate the power rate of convergence to the efficient payoff frontier when the folk theorem holds. An implication is that the gains from withholding performance feedback from agents are small when the parties are patient. 
653 |a Power 
653 |a Feedback 
653 |a Equilibrium 
653 |a Convergence 
653 |a Recursion 
653 |a Privacy 
653 |a Games 
653 |a Efficiency 
653 |a Incentives 
700 1 |a Wolitzky, Alexander  |u Department of Economics, MIT, 
773 0 |t Theoretical Economics  |g vol. 20, no. 4 (Nov 1, 2025), p. 1461-1521 
786 0 |d ProQuest  |t ABI/INFORM Global 
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