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optimally offers a contract that makes the agent's utility concave in output. If the agent is risk-neutral and protected by … concavity constraint might bind for some outputs but not others. We characterize the unique profit-maximizing contract and show …
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We consider rules (strategies, commitments, contracts, or computer programs) that make behavior contingent on an opponent's rule. The set of perfectly observable rules is not well defined. Previous contributions avoid this problem by restricting the rules deemed admissible. We instead limit the...
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