# Artificial Intelligence and Dual Contract

arXiv: https://arxiv.org/abs/2303.12350 · HTML: https://mlsanity.com/paper/2303.12350/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Builds on 6 of its 35 references that are in the map.
- First posted on arXiv 22 Mar 2023.

## Builds on (most cited first, 6 of 6)

- [Training language models to follow instructions with human feedback](https://mlsanity.com/paper/2203.02155/) (2022)
- [Multi-Agent Reinforcement Learning: A Selective Overview of Theories and Algorithms](https://mlsanity.com/paper/1911.10635/) (2019)
- [Artificial Intelligence, Values and Alignment](https://mlsanity.com/paper/2001.09768/) (2020)
- [GPTs are GPTs: An Early Look at the Labor Market Impact Potential of Large Language Models](https://mlsanity.com/paper/2303.10130/) (2023)
- [Incomplete Contracting and AI Alignment](https://mlsanity.com/paper/1804.04268/) (2018)
- [Artificial Intelligence and Auction Design](https://mlsanity.com/paper/2202.05947/) (2022)

## Abstract (arXiv)

This paper explores the capacity of artificial intelligence (AI) algorithms to autonomously design incentive-compatible contracts in dual-principal-agent settings, a relatively unexplored aspect of algorithmic mechanism design. We develop a dynamic model where two principals, each equipped with independent Q-learning algorithms, interact with a single agent. Our findings reveal that the strategic behavior of AI principals (cooperation vs. competition) hinges crucially on the alignment of their profits. Notably, greater profit alignment fosters collusive strategies, yielding higher principal profits at the expense of agent incentives. This emergent behavior persists across varying degrees of principal heterogeneity, multiple principals, and environments with uncertainty. Our study underscores the potential of AI for contract automation while raising critical concerns regarding strategic manipulation and the emergence of unintended collusion in AI-driven systems, particularly in the context of the broader AI alignment problem.