Paper ID: 2403.07143

New Perspectives in Online Contract Design

Shiliang Zuo

This work studies the repeated principal-agent problem from an online learning perspective. The principal's goal is to learn the optimal contract that maximizes her utility through repeated interactions, without prior knowledge of the agent's type (i.e., the agent's cost and production functions). This work contains three technical results. First, learning linear contracts with binary outcomes is equivalent to dynamic pricing with an unknown demand curve. Second, learning an approximately optimal contract with identical agents can be accomplished with a polynomial sample complexity scheme. Third, learning the optimal contract with heterogeneous agents can be reduced to Lipschitz bandits under mild regularity conditions. The technical results demonstrate that the one-dimensional effort model, the default model for principal-agent problems in economics which seems largely ignored in recent works from the computer science community, may possibly be the more suitable choice when studying contract design from a learning perspective.

Submitted: Mar 11, 2024