Subgame Perfect Implementation with Almost Perfect Information and the Hold-Up Problem
AbstractThe foundations of incomplete contracts have been questioned using or extending the subgame perfect implementation approach of Moore and Repullo (1988). We consider the robustness of subgame perfect implementation to the introduction of small amounts of asymmetric information. We show that Moore-Repullo mechanisms may not yield (even approximately) truthful revelation in pure or totally mixed strategies as the amount of asymmetric information goes to zero. Moreover, we argue that a wide class of extensive-form mechanisms are subject to this fragility.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 3708929.
Date of creation: 2009
Date of revision:
Publication status: Published in NBER Working Paper Series
Other versions of this item:
- Philippe Aghion & Drew Fudenberg & Richard T. Holden, 2009. "Subgame Perfect Implementation with Almost Perfect Information and the Hold-Up Problem," NBER Working Papers 15167, National Bureau of Economic Research, Inc.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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- Philippe Aghion & Drew Fudenberg & Richard Holden & Takashi Kunimoto & Olivier Tercieux, 2012. "Subgame-Perfect Implementation Under Information Perturbations," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1843-1881.
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