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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15167.
Date of creation: Jul 2009
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Other versions of this item:
- Holden, Richard T. & Fudenberg, Drew & Aghion, Philippe, 2009. "Subgame Perfect Implementation with Almost Perfect Information and the Hold-Up Problem," Scholarly Articles 3708929, Harvard University Department of Economics.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-28 (All new papers)
- NEP-CTA-2009-07-28 (Contract Theory & Applications)
- NEP-GTH-2009-07-28 (Game Theory)
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- Kim-Sau Chung & Jeffrey C. Ely, 2001.
"Implementation with Near-Complete Information,"
1332, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Jonathan Weinstein & Muhamet Yildiz, 2007. "A Structure Theorem for Rationalizability with Application to Robust Predictions of Refinements," Econometrica, Econometric Society, vol. 75(2), pages 365-400, 03.
- repec:nbr:nberch:3051 is not listed on IDEAS
- Andres Almazan & Javier Suarez & Sheridan Titman, 2007.
"Firms' Stakeholders and the Costs of Transparency,"
NBER Working Papers
13647, National Bureau of Economic Research, Inc.
- 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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