Existence of equilibrium in common agency games with adverse selection

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Existence of equilibrium in common agency games with adverse selection

Author Info

Carmona, Guilherme
Fajardo, José

Additional information is available for the following registered author(s):

José Santiago Fajardo

Abstract

We establish the existence of subgame perfect equilibria in general menu games, known to be sufficient to analyze common agency problems. Our main result states that every menu game satisfying enough continuity properties has a subgame perfect equilibrium. Despite the continuity assumptions that we make, discontinuities naturally arise due to the absence, in general, of continuous optimal choices for the agent. Our approach, then, is based on (and generalizes) the existence theorem of [Simon, L., Zame, W., 1990. Discontinuous games and endogenous sharing rules. Econometrica 58 (4), 861-872] designed for discontinuous games.

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Publisher Info
Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 66 (2009)
Issue (Month): 2 (July)
Pages: 749-760
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Handle: RePEc:eee:gamebe:v:66:y:2009:i:2:p:749-760

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Web page: http://www.elsevier.com/locate/inca/622836

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Paper
- Guilherme Carmona & José Fajardo, 2006. "Existence of Equilibrium in Common Agency Games with Adverse Selection," IBMEC RJ Economics Discussion Papers 2006-05, Economics Research Group, IBMEC Business School - Rio de Janeiro. [Downloadable!]
- Carmona, Guilherme & Fajardo, Jose, 2006. "Existence of Equilibrium in Common Agency Games with Adverse Selection," FEUNL Working Paper Series wp490, Universidade Nova de Lisboa, Faculdade de Economia. [Downloadable!]

References listed on IDEAS
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.:

Simon, Leo K & Zame, William R, 1990. "Discontinuous Games and Endogenous Sharing Rules," Econometrica, Econometric Society, vol. 58(4), pages 861-72, July. [Downloadable!] (restricted)
Other versions:
- Leo K. Simon and William R. Zame., 1987. "Discontinuous Games and Endogenous Sharing Rules," Economics Working Papers 8756, University of California at Berkeley.
Maskin, Eric & Tirole, Jean, 1990. "The Principal-Agent Relationship with an Informed Principal: The Case of Private Values," Econometrica, Econometric Society, vol. 58(2), pages 379-409, March. [Downloadable!] (restricted)
Peters, Michael, 2001. "Common Agency and the Revelation Principle," Econometrica, Econometric Society, vol. 69(5), pages 1349-72, September.
Other versions:
- Michael Peters, 1999. "Common Agency and the Revelation Principle," Working Papers peters-99-01, University of Toronto, Department of Economics. [Downloadable!]
David Martimort & Lars Stole, 2002. "The Revelation and Delegation Principles in Common Agency Games," Econometrica, Econometric Society, vol. 70(4), pages 1659-1673, July. [Downloadable!] (restricted)
Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-94, July. [Downloadable!] (restricted)
Other versions:
- David M Kreps & Robert Wilson, 2003. "Sequential Equilibrium," Levine's Working Paper Archive 618897000000000813, David K. Levine. [Downloadable!]
Page, Frank Jr. & Monteiro, Paulo K., 2003. "Three principles of competitive nonlinear pricing," Journal of Mathematical Economics, Elsevier, vol. 39(1-2), pages 63-109, February. [Downloadable!] (restricted)
Other versions:
- Page, F.H.Jr. & Monteiro, P.K., 2001. "Three Principles of Competitive Nonlinear Pricing," The Warwick Economics Research Paper Series (TWERPS) 592, University of Warwick, Department of Economics. [Downloadable!]
- Frank H. Page & Paulo Klinger Monteiro, 2002. "Three principles of competitive nonlinear pricing," Game Theory and Information 0204001, EconWPA. [Downloadable!]
- Page Junior, Frank H. & Monteiro, Paulo Klinger, 2002. "Three Principles of Competitive Nonlinear Pricing," Economics Working Papers (Ensaios Economicos da EPGE) 442, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]

Full references

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.)

Frank H. Page, Jr. & Paulo K. Monteiro, 2007. "Endogenous Mechanisms and Nash Equilibrium in Competitive Contracting," Caepr Working Papers 2007-025, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]

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