9410545 Ausubel This research will attempt to capture the essential features of principal-agent relationships by studying a sequential recontracting game between a seller of a divisible good and a buyer whose type may influence the number of units that it is efficient to trade. One key aspect of the model is that the players can make the trade prescribed by the current contract while still negotiating a new contract. The research emphasis include: - Analysis of the sequential contracting game under incomplete information. - Extending the analysis to account for other types of agency problems, such as those incorporating moral hazard or relation- specific investments. - Application of the analysis to the principal-agent problem between the shareholders and management of a corporation, and to other areas of substantive economic interest. This study is important because the issue of recontracting is fundamental to our understanding of the imporatnce of property rights.
