Robust Contracts with Exploration
Release time：02 September 2025
Sep
05
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Time & Date
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14:00 pm
-
15:30 pm,
September
05,
2025
(Friday)
|
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Venue
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Room 904, Teaching Complex D Building
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| TOPIC | Robust Contracts with Exploration |
| TIME&DATE | 02:00 pm -03:30 pm, September 5, 2025 (Friday) |
| Venue | Room 904, Teaching Complex D Building |
| Speaker |
Chang Liu The University of New South Wales |
| Abstract | We study a two-period moral hazard problem; there are two agents, with action sets that are unknown to the principal. The principal contracts with each agent sequentially, and seeks to maximize the worst-case discounted sum of payoffs, where the worst case is over the possible action sets. The principal observes the action chosen by the first agent, and then offers a new contract to the second agent based on this knowledge, thus having the opportunity to explore in the first period. We introduce and compare three different notions of dynamic worst-case considerations. Within each notion, we define a suitable rule of updating and characterize the principal's optimal payoff guarantee. We find that linear contracts are robustly optimal not only in static settings, but also in dynamic environments with exploration. |
| Biography | Chang Liu is a Lecturer in Economics at the UNSW Business School. His research is primarily in pure and applied microeconomic theory. He is particularly focused on the equilibrium behavior and the design of mechanisms in settings where dynamic considerations are significant features of the environment. Prior to joining UNSW, he was a Postdoctoral Fellow at the Simons Laufer Mathematical Sciences Institute (SLMath, formerly MSRI). He holds a Ph.D. in Economics from Harvard University. |
