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 InfoPaper provided by Pennsylvania State - Department of Economics in its series Papers with number 11-95-13.
Length: 16 pages
Date of creation: 1995
Date of revision:
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Postal: PENNSYLVANIA STATE UNIVERSITY, DEPARTMENT OF ECONOMICS, UNIVERSITY PARK PENNSYLVANIA 16802 U.S.A.
Web page: http://econ.la.psu.edu/
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GAME THEORY; ECONOMIC EQUILIBRIUM;
Other versions of this item:
- Eric W. Bond & Thomas A. Gresik, 1997. "Competition between asymmetrically informed principals," Economic Theory, Springer, vol. 10(2), pages 227-240.
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
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