On the complexity of repeated principal agent games

In Koo Cho

Research output: Contribution to journalArticlepeer-review


We examine an infinitely repeated principal agent game without discounting (Radner [1985]), in which the agent may engage in multiple projects. We focus on "linear" strategies that summarize each history into a linear function of public outcomes, and select an action according to a single threshold rule. We claim that linear strategies significantly simplify the computation needed to make strategic decisions following each history. Despite the simplicity of linear strategies, we can virtually recover the folk theorem. For any individually rational payoff vector in the interior of the set of feasible expected payoff vectors, there exists a pair of linear strategies that form a Nash equilibrium supporting the target payoff. The equilibrium strategies and the equilibrium payoff vectors form a globally stable solution (Smale [1980]).

Original languageEnglish (US)
Pages (from-to)1-17
Number of pages17
JournalEconomic Theory
Issue number1
StatePublished - Jan 1996

ASJC Scopus subject areas

  • Economics and Econometrics


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