In fresh years there was an important bring up of curiosity in continuous-time Principal-Agent types, or agreement concept, and their purposes. Continuous-time types supply a robust and chic framework for fixing stochastic optimization difficulties of discovering the optimum contracts among events, below quite a few assumptions at the details they've got entry to, and the influence they've got at the underlying "profit/loss" values. This monograph surveys contemporary result of the idea in a scientific means, utilizing the technique of the so-called Stochastic greatest precept, in types pushed via Brownian Motion.
Optimal contracts are characterised through a process of Forward-Backward Stochastic Differential Equations. In a few fascinating specified situations those might be solved explicitly, allowing derivation of many qualitative financial conclusions.
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