# Contracting theory with competitive interacting agents

arXiv: https://arxiv.org/abs/1605.08099 · HTML: https://mlsanity.com/paper/1605.08099/

## Key facts

- Cited by 1 papers in the map (data through 14 Oct 2026).
- First posted on arXiv 25 May 2016.

## Built on by (most cited first, 1 of 1)

- [Polynomial Scaling is Possible For Neural Operator Approximations of Structured Families of BSDEs](https://mlsanity.com/paper/2410.14788/) (2024)

## Abstract (arXiv)

In a framework close to the one developed by Holmstr"om and Milgrom [44], we study the optimal contracting scheme between a Principal and several Agents. Each hired Agent is in charge of one project, and can make efforts towards managing his own project, as well as impact (positively or negatively) the projects of the other Agents. Considering economic Agents in competition with relative performance concerns, we derive the optimal contracts in both first best and moral hazard settings. The enhanced resolution methodology relies heavily on the connection between Nash equilibria and multidimensional quadratic BSDEs. The optimal contracts are linear and each agent is paid a fixed proportion of the terminal value of all the projects of the firm. Besides, each Agent receives his reservation utility, and those with high competitive appetence are assigned less volatile projects, and shall even receive help from the other Agents. From the principal point of view, it is in the firm interest in our model to strongly diversify the competitive appetence of the Agents.