Pith Number

pith:N3ZCCGVG

pith:2026:N3ZCCGVG6QOTD4BCZ6SCEK3EE5

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Principal-agent problems with adverse selection: A stochastic target problem formulation

Guillermo Alonso Alvarez, Ibrahim Ekren, Liwei Huang

The agent's optimization in unique-contract adverse selection problems reformulates as a stochastic target problem, turning the principal's design into a stochastic control problem with partial information and state constraints.

arxiv:2605.01080 v2 · 2026-05-01 · econ.TH · math.OC

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\pithnumber{N3ZCCGVG6QOTD4BCZ6SCEK3EE5}

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The bundle contains the canonical record plus signed events. A mirror can host it anywhere and recompute the same current state with the deterministic merge algorithm.

Claims

C1strongest claim

We show that the agent's optimization problem can be reformulated as a stochastic target problem. After characterizing the credible domain of this target problem, we show that the principal's objective can be solved as a stochastic optimal control problem with partial information and state constraints.

C2weakest assumption

The principal is restricted to offering a unique contract (rather than a menu), and the agent's problem admits an exact reformulation as a stochastic target problem whose credible domain can be characterized.

C3one line summary

Principal-agent adverse selection with unique contracts is reformulated as a stochastic target problem for the agent and a stochastic optimal control problem for the principal.

Receipt and verification

First computed	2026-05-20T00:03:13.343928Z
Builder	pith-number-builder-2026-05-17-v1
Signature	Pith Ed25519 (`pith-v1-2026-05`) · public key
Schema	pith-number/v1.0

Canonical hash

6ef2211aa6f41d31f022cfa4222b642764cd8a8c0c5f10e0c1a77bee7862a064

Aliases

arxiv: 2605.01080 · arxiv_version: 2605.01080v2 · doi: 10.48550/arxiv.2605.01080 · pith_short_12: N3ZCCGVG6QOT · pith_short_16: N3ZCCGVG6QOTD4BC · pith_short_8: N3ZCCGVG

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Verify this Pith Number yourself

curl -sH 'Accept: application/ld+json' https://pith.science/pith/N3ZCCGVG6QOTD4BCZ6SCEK3EE5 \
  | jq -c '.canonical_record' \
  | python3 -c "import sys,json,hashlib; b=json.dumps(json.loads(sys.stdin.read()), sort_keys=True, separators=(',',':'), ensure_ascii=False).encode(); print(hashlib.sha256(b).hexdigest())"
# expect: 6ef2211aa6f41d31f022cfa4222b642764cd8a8c0c5f10e0c1a77bee7862a064

Canonical record JSON

{
  "metadata": {
    "abstract_canon_sha256": "9760a8343711438a3275f23e50ed48a0fdb2329f85e42f5b40e82f998e91c416",
    "cross_cats_sorted": [
      "math.OC"
    ],
    "license": "http://creativecommons.org/licenses/by/4.0/",
    "primary_cat": "econ.TH",
    "submitted_at": "2026-05-01T20:24:19Z",
    "title_canon_sha256": "faae0bb63ec508b8fd99bd17f7beb7e1e636acf95073fb0acca141c4f952c54b"
  },
  "schema_version": "1.0",
  "source": {
    "id": "2605.01080",
    "kind": "arxiv",
    "version": 2
  }
}