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arXiv · 1808.07942

Finite-State Contract Theory with a Principal and a Field of Agents

Rene Carmona·Peiqi Wang
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Abstract

We use the recently developed probabilistic analysis of mean field games with finitely many states in the weak formulation, to set-up a principal / agent contract theory model where the principal faces a large population of agents interacting in a mean field manner. We reduce the problem to the optimal control of dynamics of the McKean-Vlasov type, and we solve this problem explicitly in a special case reminiscent of the linear - quadratic mean field game models. The paper concludes with a numerical example demonstrating the power of the results when applied to a simple example of epidemic containment.

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Rene Carmona, Peiqi Wang. 2018-08-23. Finite-State Contract Theory with a Principal and a Field of Agents. https://arxiv.org/abs/1808.07942

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