Common agency and public good provision under asymmetric information
AbstractThe provision of public goods under asymmetric information has most often been viewed as a mechanism design problem under the aegis of an uninformed mediator. This paper focuses on institutional contexts without such mediator. Contributors privately informed on their willingness to pay non-cooperatively offer contribution schedules to an agent who produces the public good on their behalf. In any separating and informative equilibrium of this common agency game under asymmetric information, instead of reducing marginal contributions to free-ride on others, principals do so to screen the agent's endogenous private information obtained from privately observing other principals' offers. Under weak conditions, existence of a differentiable equilibrium is shown. Equilibria are always ex post inefficient and interim efficient if and only if the type distribution has a linear hazard rate. This points at the major inefficiency of contribution games under asymmetric information and stands in sharp contrast with the more positive efficiency result that the common agency literature has unveiled when assuming complete information. Extensions of the model address direct contracting between principals, the existence of pooling uninformative equilibria and the robustness of our findings to the possibility that principals entertain more complex communication with their agent.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Econometric Society in its journal Theoretical Economics.
Volume (Year): 5 (2010)
Issue (Month): 2 (May)
Contact details of provider:
Web page: http://econtheory.org
Common agency; asymmetric information; public goods; ex post and interim efficiency;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Simone Galperti, 2011. "Common Agency with Informed Principals: Menus and Signals," Discussion Papers 1541, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Martimort, David & Stole, Lars, 2011. "Aggregate Representations of Aggregate Games," MPRA Paper 32871, University Library of Munich, Germany.
- Michael Peters & Balázs Szentes, 2012.
"Definable and Contractible Contracts,"
Econometric Society, vol. 80(1), pages 363-411, 01.
- Senatore, L, 2011. "Public Good Provision with Convex Costs," MPRA Paper 36984, University Library of Munich, Germany.
- Barbieri, Stefano & Malueg, David A., 2010.
"Threshold uncertainty in the private-information subscription game,"
Journal of Public Economics,
Elsevier, vol. 94(11-12), pages 848-861, December.
- Stefano Barbieri & David A. Malueg, 2009. "Threshold Uncertainty in the Private-Information Subscription Game," Working Papers 0903, Tulane University, Department of Economics.
- Stefano Barbieri & David A. Malueg, 2010. "Increasing Fundraising Success by Decreasing Donor Choice," Working Papers 1006, Tulane University, Department of Economics.
- Giovanni Ursino & Salvatore Piccolo & Piero Tedeschi, 2013.
"Deceptive Advertising with Rational Buyers,"
CSEF Working Papers
348, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martin J. Osborne).
If references are entirely missing, you can add them using this form.