Games with Externalities and Delegation to a Common Agent
AbstractI present a model in which the players of a game have the option to delegate parts of their strategies to a third party who has an interest in the outcome of the game. I analyze whether the game with delegation to a common agent improves over the equilibrium of the original game. This paper contributes to the literature on private common agency and to the failure of the revelation principle with multiple principals. One contribution of this paper is the characterization of the complete set of equilibrium outcomes for the game with delegation, including the asymmetric outcomes. I also provide an answer to the question whether the results of the existing models of private common agency are robust to mixed strategy deviations and shed light on the persistence of the failure of revelation principle.
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Bibliographic InfoPaper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 0710.
Length: 36 pages.
Date of creation: Sep 2007
Date of revision:
Common Agency Games; Delegation; Revelation Principle; Games with Externalities.;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
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