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The variables are:
*Policy set by the principal is <math>x_t \in X\,</math>, for <math>t=\{1,2\}\,</math>.
*Agents have ideal points of <math>x^A\,</math> and <math>x^P\,</math>.
*Agents can invest in capacity <math>c\,</math>, at a cost <math>k(c)\,</math> which is continuous, increasing and convex
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