Contracting a crowd of heterogeneous agents (opens in new tab)

We study optimal contract design for large populations of heterogeneous agents whose actions generate network spillovers represented by an interaction function. In a linear-quadratic framework, we solve the finite-agent problem and its continuum limit, obtaining explicit optimal contracts and equilibrium efforts. We show that the continuum contract can be evaluated on a large finite sample of agents to obtain admissible contracts that achiev...