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Endogenous Games and Mechanisms: Side Payments Among Players

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Author Info
Matthew O. Jackson
Simon Wilkie

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Abstract

We characterize the outcomes of games when players may make binding offers of strategy contingent side payments before the game is played. This does not always lead to efficient outcomes, despite complete information and costless contracting. The characterizations are illustrated in a series of examples, including voluntary contribution public good games, Cournot and Bertrand oligopoly, principal-agent problems, and commons games, among others. Copyright The Review of Economic Studies Limited, 2005.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-937X.2005.00342.x
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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Economic Studies.

Volume (Year): 72 (2005)
Issue (Month): 2 (04)
Pages: 543-566
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Handle: RePEc:bla:restud:v:72:y:2005:i:2:p:543-566

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  5. Marx, Leslie M & Matthews, Steven A, 2000. "Dynamic Voluntary Contribution to a Public Project," Review of Economic Studies, Blackwell Publishing, vol. 67(2), pages 327-58, April.
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  6. Ilya Segal, 1999. "Contracting With Externalities," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 337-388, May. [Downloadable!] (restricted)
  7. Guttman, Joel M, 1978. "Understanding Collective Action: Matching Behavior," American Economic Review, American Economic Association, vol. 68(2), pages 251-55, May. [Downloadable!] (restricted)
  8. Fershtman, Chaim & Judd, Kenneth L & Kalai, Ehud, 1991. "Observable Contracts: Strategic Delegation and Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 551-59, August. [Downloadable!] (restricted)
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  9. Lagunoff, Roger, 1992. "Fully Endogenous Mechanism Selection on Finite Outcome Sets," Economic Theory, Springer, vol. 2(4), pages 465-80, October.
  10. Hal R. Varian, 1994. "Sequential Provision of Public Goods," Public Economics 9401003, EconWPA. [Downloadable!]
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  11. Bensaid, Bernard & Gary-Bobo, Robert J., 1996. "An Exact Formula for the Lion's Share: A Model of Preplay Negotiation," Games and Economic Behavior, Elsevier, vol. 14(1), pages 44-89, May. [Downloadable!] (restricted)
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  12. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November. [Downloadable!] (restricted)
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  14. repec:att:wimass:19199918 is not listed on IDEAS
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  16. Matthew O. Jackson, 2001. "A crash course in implementation theory," Social Choice and Welfare, Springer, vol. 18(4), pages 655-708. [Downloadable!] (restricted)
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  17. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March. [Downloadable!] (restricted)
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  18. Admati, Anat R & Perry, Motty, 1991. "Joint Projects without Commitment," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 259-76, April. [Downloadable!] (restricted)
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  21. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. V. Bhaskar, 2004. "Games Played in a Contracting Environment," Economics Discussion Papers 583, University of Essex, Department of Economics. [Downloadable!]
  2. Richard B. Freeman, 2006. "Searching for the EU Social Dialogue Model," NBER Working Papers 12306, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Sophie Bade & Guillaume Haeringer & Ludovic Renou, 2006. "Bilateral Commitment," Working Papers 2006-07, University of Adelaide, School of Economics. [Downloadable!]
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  4. Levent Kockesen & Emanuele Gerratana, 2009. "Strategic Effects of Incomplete and Renegotiation-Proof Contracts," TÜSİAD-Koç University Economic Research Forum Working Papers 0908, TUSIAD-Koc University Economic Research Forum. [Downloadable!]
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