Competition between asymmetrically informed principals
AbstractThis paper derives the set of equilibria for common agency games in which the principals compete in piece rates and lump sum payments and one principal has incomplete information about the agent's preferences. We show that the uninformed principal's expected payoff function is discontinuous with respect to the identity of the marginal agent type. This discontinuity is shown to support an open set of equilibria. For games in which the first-best equilibrium strategies are measurable with respect to the uninformed principal's information partition, this result implies the existence of an open set of Pareto inefficient equilibria.
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 10 (1997)
Issue (Month): 2 ()
Note: Received: December 5, 1995; revised version August 18, 1996
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Other versions of this item:
- Bond, E.W. & Gresik & T.A., 1995. "Competition Between Asymmetrically Informed Principals," Papers 11-95-13, Pennsylvania State - Department of Economics.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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- Diaw, Khaled & Pouyet, Jérôme, 2004.
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- Diaw, K. & Pouyet, J., 2004. "The Dilemma of Tax Competition: How (not) to attract (Inefficient) Firms?," Discussion Paper 2004-68, Tilburg University, Center for Economic Research.
- Thomas Troeger & Tymofiy Mylovanov, 2010. "Optimal Auction Design and Irrelevance of Privacy of Information," 2010 Meeting Papers 1039, Society for Economic Dynamics.
- Thomas A. Gresik, 2001. "The Taxing Task of Taxing Transnationals," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 800-838, September.
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