Holmstrom's theorem, in economics, is an impossibility result attributed to Bengt Holmstrom showing that no incentive scheme for a team of agents can simultaneously guarantee that total payments to the team equal total output, that the scheme has a Nash equilibrium, and that the resulting outcome is Pareto efficient.
Facts
Statementno incentive system for a team of agents can make all of the following true: income equals outflow, the system has a Nash equilibrium, and the system is Pareto efficient 2 Classification
Statement Form Connections
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Entity-backed identity for the statement-form enum value this theorem already carries, resolved to a mathematics concept by an explicit value-to-entity map (phase 3 bucket conversion, docs\design_entity_backed_browse_buckets_20260928.md). The statement-form fact itself stays on the theorem unchanged.
Sources
1. Wikipedia: Holmström's theorem
WikipediaLead section, statement-form referenceQuote, Lead section, statement-form reference
In economics, Holmström's theorem is an impossibility theorem or trilemma attributed to Bengt R.
2. Holmstrom's theorem - Wikipedia
Introduction
no incentive system for a team of agents can make all of the following true: (1) Income equals outflow, (2) The system has a Nash equilibrium, and (3) The system is Pareto efficient.
References section
Bengt Holmstrom, "Moral Hazard in Teams", The Bell Journal of Economics 13, no. 2 (1982), pp. 324-340.
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