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Dynamic programming solution of incentive constrained problems

Aldo Rustichini
- 01 Feb 1998 - 
- Vol. 78, Iss: 2, pp 329-354
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TLDR
In this article, the value function for the problem is shown to be the fixed point of an appropriately defined operator, which is a variation of standard dynamic programming techniques, and it is shown how to reduce this class of problems to a simple variation of regular programming techniques.
About: 
This article is published in Journal of Economic Theory.The article was published on 1998-02-01 and is currently open access. It has received 48 citations till now. The article focuses on the topics: Constraint (information theory) & Bellman equation.

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Citations
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Journal ArticleDOI

Gradualism in Trade Agreements with Asymmetric Countries

Eric W. Bond, +1 more
- 01 Apr 2002 - 
TL;DR: This article used recursive methods to characterize the payoff frontier of self-enforcing trade agreements between countries of asymmetric size and showed that at points on the frontier where only one country's incentive constraint binds, the efficient agreement will be a non-stationary one that starts with a positive trade distortion but eventually reaches free trade.
Journal ArticleDOI

Efficient Allocations with Moral Hazard and Hidden Borrowing and Lending

Arpad Abraham, +2 more
- 01 Apr 2004 - 
TL;DR: In this paper, the authors analyzed a dynamic moral hazard setting, in which agents can borrow and lend and their decisions about effort, consumption and savings are private information, and showed that as long as agents do not have perfect control over publicly observable outcomes, the efficient allocation is welfare improving with respect to the case where the agents can self insure only through borrowing and lending.
Journal ArticleDOI

Efficient allocations with moral hazard and hidden borrowing and lending: A recursive formulation

Arpad Abraham, +1 more
- 01 Oct 2008 - 
TL;DR: Fortran 90 code for the different satges of the computational procedure, and Matlab program to treat and display the generated data.
Journal ArticleDOI

Employment Fluctuations with Downward Wage Rigidity: The Role of Moral Hazard

James Costain, +2 more
- 15 Nov 2010 - 
TL;DR: This article considered a dynamic matching model with imperfectly observable worker effort and showed that workers' shirking motive reduces the cyclical fluctuations in job destruction, because firms are forced to terminate some marginal jobs in booms which they cannot commit to maintain in recessions.
Journal ArticleDOI

A dynamic optimization model for school network planning

António Pais Antunes, +1 more
- 01 Jun 2000 - 
TL;DR: A dynamic (multi-period) optimization model that has recently been used in Portugal to formulate planning proposals for the evolution of several school networks, and allows for facility closure or size reduction, as well as facility opening and size expansion.
References
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Book

Recursive methods in economic dynamics

Nancy L. Stokey, +2 more
TL;DR: In this article, a deterministic model of optimal growth is proposed, and a stochastic model is proposed for optimal growth with linear utility and linear systems and linear approximations.
Book

Variational Convergence for Functions and Operators

Hedy Attouch
Journal ArticleDOI

Optimal taxation of capital income in general equilibrium with infinite lives

Christophe Chamley
- 01 May 1986 - 
TL;DR: In this article, the optimal tax on capital income in general equilibrium models of the second best is analyzed and shown to be zero in the long run for a special case of additively separable utility functions and conditions that are sufficient for the local stability of the steady state.
Posted Content

Stationary Ordinal Utility and Impatience

Tjalling C. Koopmans
- 01 Jan 1959 - 
TL;DR: In this article, it is shown that simple postulates about the utility function of a consumption program for an infinite future logically imply impatience at least for certain broad classes of programs.
Journal ArticleDOI

Stationary Ordinal Utility and Impatience

Tjalling C. Koopmans
- 01 Apr 1960 - 
TL;DR: In this article, it is shown that simple postulates about the utility function of a consumption program for an infinite future logically imply impatience at least for certain broad classes of programs.
Related Papers (5)

Recursive methods in economic dynamics

Nancy L. Stokey, +2 more

Toward a theory of discounted repeated games with imperfect monitoring

Dilip Abreu, +2 more
- 01 Sep 1990 - 

Debt-Constrained Asset Markets

Timothy J. Kehoe, +1 more
- 01 Oct 1993 - 

Implications of Efficient Risk Sharing without Commitment

Narayana R. Kocherlakota
- 01 Oct 1996 - 

On Repeated Moral Hazard with Discounting

Stephen E. Spear, +1 more
- 01 Oct 1987 - 
Frequently Asked Questions (1)
Q1. What are the contributions mentioned in the paper "Dynamic programming solution of incentive constrained problems" ?

In this paper, Bcnhabih and Lehniques showed that the problem of finding the fixed point of an appropriately defined value function can be solved by a dynamical approach.