INCOMPLETE RECORD-KEEPING AND OPTIMAL PAYMENT ARRANGEMENTS

We study a random-matching, absence-of-double-coinsidence environment in which people cannot precommit and in which there are two imperfect ways to keep track of what other people have done in the past: money a nd a public record of all past actions that is updated with an average lag. We study how the magnitude of that lag affects the allocations t hat are optimal from among allocations that are stationary and feasibl e and that satisfy incentive constraints which arise from the absence of commitment and the imperfect ways of keeping track of what others h ave done in the past. (C) 1998 Academic Press.