explore the effect of this size-dependence regularity on moral hazard and investment, we develop a continuous-time agency …

—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 …

are illustrated numerically for a variety of utility functions commonly used in decision theory …