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Bayesian-Nash vs dominant-strategy implementation with countervailing incentives: the two-type case

Author

Listed:
  • Annalisa Vinella

    (University of Bari)

Abstract

We extend the principal/one-agent model with countervailing incentives to a framework in which the principal deals with two agents behaving non-cooperatively and protected by limited liability. Focusing on the two-type case, we show that, beside the situation in which first best is effected even without relying on type correlation, dominant-strategy implementation yields no penalty to the principal, with respect to Bayesian-Nash implementation, when the principal faces, on the opposite, very tight constraints.

Suggested Citation

  • Annalisa Vinella, 2010. "Bayesian-Nash vs dominant-strategy implementation with countervailing incentives: the two-type case," Economics Bulletin, AccessEcon, vol. 30(1), pages 636-649.
    • Handle: RePEc:ebl:ecbull:eb-10-00007
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    More about this item

    Keywords

    Countervailing incentives; Type correlation; Bayesian-Nash implementation; Dominant-strategy implementation;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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