Principal-Agent Problem in a Fuzzy Environment

This paper studies implementation of a classical principal-agent problem in which the agents´ characteristics are supposed to be unknown to the principal. It is reasonable for us to employ fuzzy variables to denote these hidden characteristics since generally they are fuzzy by nature. A fuzzy expected value model, which aims to maximize the utility function of the principal under the incentive constraints, is developed from the principal´s point of view. Pontryagin maximum principle is adopted in this paper to find the optimal solutions to the fuzzy expected value model.