—the theory of recursive contracts. Recursive formulations allow us to reduce often complex models to a sequence of essentially … of the basic theory: the Revelation Principle, formulating and simplifying the incentive constraints, using promised … advanced topics: duality theory and Lagrange multiplier techniques, models with lack of commitment, and martingale methods in …

insurance contract with a risk-averse agent who receives a stochastic income stream and is unable to make commitment to keep the … contract. This problem involves an infinite number of constraints at all times and at each state of the world. Miao and Zhang … stopping problems. We show how an optimal contract can be implemented by a pair of accounts …